CHAPTER-1

INTRODUCTION

In the year 1882 a 50-line manual telephone exchange was

commissioned in Kolkata, has given beginning to the journey of

telephone service. In 1950 the number of Telephone Exchanges take

control of from princely states was 196.The installed capacity of

these 196 exchanges were 13,362 lines with 11,296 working

connections. After independence in the year 1947, the country had

about 82,000 telephone connections, which slowly increased up to

3.05 million by the year 1984. Till 31st December, 1984 postal,

telegraph and telephone services were managed by the Posts and

Telegraphs Department. Telecom Commission was constituted the

year 1989. In the year 1992 Telecommunication sector in India

liberalized to bridge the gap through government spending and to

provide additional resources for the nation’s   telecom target .In the

year1993 The Telecom industry got an annual foreign investment of

Rs 20.6 million. During the phase of liberalization the telecom sector

in India was under the control of government until the year 1994 and

in the same year National Telecom Policy was announced. License

for providing cellular mobile services granted by the government of

India for Metropolitan cities of Delhi, Mumbai, Kolkata and Chennai.

Cellular mobile service to be duopoly (i.e. not more than two cellular

mobile operators could be licensed in each telecom circle). In 1995

(August) Kolkata became the first metro to have a cellular network.

TRAI (Telecom Regulatory Authority of India) was formed on January

1997. The objective to formulate the body is to “provide an effective

regulatory framework and adequate safeguards to ensure fair

competition and protection of consumer interests”.  The

Government of India corporatized the operations wing of Dot in 2000

and renamed Department of Telecom as Bharat Sanchar Nigam

Limited (BSNL).In last 10 years many private operator’s especially

foreign investors successfully entered the high potential Indian

telecom market. Globally acclaimed operators like Telenor, NTT

Docomo, Vodafone, System, SingTel, Maxis, and Etisalat invested in

India mobile operators. India stands on third position in largest

Internet users of which 40% of Internet used via mobile phones after

US and Japan. India ranks one of the lowest providers of broadband

speed as compared countries such as Japan and Norway. Minimum

broadband speed of 256kbit/s but speed above 2Mbits is still in a

nascent stage. Year 2007 had been declared as “Year of Broadband”

in India. The ‘Indian Telecom Industry ‘services have widened their

area in all the spheres of communication. Indian Telecom Industry is

the fifth largest and fastest growing industry in the world with

110.01 million connections. The subscriber base has grown by 40%

in 2005. Over the last 3 years, two out of every three new telephone

con006Eections were wireless. The wireless subscriber base

skyrocketed from 33.69 million in 2004 to 62.57 million in FY 2004 -

2005. The wireless technologies currently in use ' Indian Telecom

Industry ' are Global System for Mobile Communications (GSM) and

Code Division Multiple Access (CDMA). There are primarily 9 GSM

and 5 CDMA operators providing mobile services in 19

telecommunication circles and 4 metro cities, covering more than

2000 towns across the country. And the numbers are still growing for

' Indian Telecom Industry

In today’s scenario Indian Telecom industry is having tough

competition in between government, private and foreign companies.

As the base of the telecom sector in the Indian economy has got its

roots and the customer base for the services is having great

dimensions, have given urge to corporate to diversify in this sector.

After the process of LPG the privatization process has also been

initiated the first private operator Bharti Airtel Limited has been

formed in June 04 1998 and it to offer fixed line telephony. Bharti

Airtel Limited, a group company of Bharti Enterprises is one of the

Asia’s leading integrated telecom services providers with its

operations in India, Sri Lanka & Bangladesh. The company is known

for being the first mobile phone company in the world which has

outsourced everything except marketing and sales. Airtel was the

first private player in telecom sector to connect all states in India. It

has been regarded as 2nd most trusted brand in 2008 in a survey

conducted by Wall Street Journal in 2008.

1.1 MARKETING STRATEGY A CONCEPTUAL VIEW:

An organization's strategy is a thought process which combines all of

its marketing goals into one comprehensive plan . A good marketing

strategy should be designed through an efficient market research

with proper focus on the right product mix in order to achieve the

maximum profit potential which will help the company to sustain the

business. The marketing strategy is the key foundation of a

marketing plan.

A marketing strategy is a process which helps an organization to

concentrate its limited resources on the greatest opportunities to

increase sales and achieve a sustainable competitive advantage.

Key concept of marketing strategy should “customer satisfaction is

the main goal”.

Marketing strategy is defined by David Aaker as a process that can

allow an organization to concentrate its resources on the optimal

opportunities with the goals of increasing sales and achieving a

sustainable competitive advantage. Marketing strategy includes all

basic short term and long-term activities of marketing which deal

with the analysis of the initial strategic situation, the formulation,

evaluation, selection of market-oriented strategies and therefore

contributes to the goals of the company & its marketing objectives.

Marketing strategies serve as the fundamental underpinning

of marketing plans designed to fill market requirement and

reach marketing objectives. Plans and objectives are generally

tested for measurable results. Normally, marketing strategies are

developed as multi-year plans, with a tactical plan with specific actions to

be accomplished in the current year. Time horizons covered by the marketing

plan vary by company, by industry, and by geographical location,

however, time horizons are becoming shorter as the speed of

change in the environment increases. Marketing strategies are

dynamic and interactive. These are partially planned and unplanned.

Marketing strategy needs to take a long term view and tools for

example; customer lifetime value models can be very powerful in

helping to simulate the effects of strategy on acquisition, revenue

per customer and churn rate.

Marketing strategy involves careful and accurate scanning of the

internal and external environments. The former include factors like

marketing mix modeling, performance analysis and strategic

constraints. External environmental factors include customer

analysis, competitor analysis, target market   analysis, as well as

evaluation of any elements of the economic, technological, cultural,

political/legal environment likely to impact success, A key

component of marketing strategy is often to keep marketing in line

with a company's overarching mission statement.

After completing an exhaustive exploration of the environment,

Company can build a strategic plan to identify business alternatives,

establish challenging goals, determine the optimal marketing mix to

attain these goals and implementation detail, a final step in

developing a strategy marketing is to create a plan to monitor

progress and a set of contingencies if problems arise in

implementing the plan.

Marketing Mix Modeling is often used to help determine the optimal

marketing budget and how to allocate across the marketing mix to

achieve these strategic goals. In addition, these models can help

allocate pass through a portfolio of brands and brand management

to create value..

A marketing strategy is most effective when it is an integral

component of firm strategy, defining how the organization will

successfully engage customers, prospects and competitors in the

given market. Business strategies, corporate missions, and corporate

goals. As a customer is the source of company revenue, marketing

strategy is closely linked with sales. A key component of marketing

strategy is often to keep in line with the primary mission of a

marketing company.

1.2 PLANNING FOR MARKETING STRATEGY

A company has to have an overall company mission which defines

what the company is all about and what makes it unique. For

example, is the firm concerned with selling consumer goods (B2C),

weapons, heavy machinery (B2B), etc. Remember it is important not

to suffer from marketing myopia, and this is why a business must be

defined in terms of a need that is being satisfied and not an existing

product.

The mission statement will also define the culture, values, and

philosophy of the firm.  The mission statement provides direction for

a firm so that employees, customers, suppliers, investors, and other

stakeholders know what the organization is about and where it is

headed.  If done well, it also serves to motivate and inspire

employees. A good mission statement considers the needs of all

stakeholders and makes it clear that the firm is not only concerned

about profit.  A large number of papers and books have been written

about corporate social responsibility (CSR).

A company must have an overall mission of the company that

defines what the company is and what makes it unique. For

example, if the company is in sale of consumer goods (B2C),

weapons, heavy machinery (B2B) etc. It is important not to suffer

from marketing myopia, and this is why a business should be defined

in terms of a need that is being satisfied and not an existing product.

The mission statement also defines the culture, values and

philosophy of the company. The mission statement provides

guidance for a firm to employees, customers, suppliers, investors

and other interested parties know what the organization is and

where it goes. If it is properly done, it also serves to inspire and

motivate employees. A good mission of the company considers the

needs of all stakeholders and it is clear that the firm is not only

concerned about profit. Many articles and books have been written

about the corporate social responsibility (CSR).

Marketing strategy consists of two steps, firstly selecting a target

market and secondly to develop the best marketing mix to satisfy

this objective. Finally, tactics are much more specific and provide

more details on topics such as, says: where should I advertise? When

should I go running ads? How do I get distribution in certain types of

stores? Etc. Indeed, the tactics of how to describe the strategies. The

resources required to implement the tactics are budgeted.

Companies should analyze and track what your competitors are

doing. It is important to know the strengths, weaknesses, objectives

and strategies of the competition.

1.3 PROCESS OF MARKETING STRATEGIES: -

Chart 1.1

STEPS OF STRATEGIC MARKETING PROCESS

Marketing is a strategic planning process that aims to establish a

unified purpose and clear direction for all marketing efforts. Their

findings are documented in a marketing plan that is updated

periodically. The five steps in strategic marketing: identifying a

mission; Analysis of the situation; set goals; develop a marketing

strategy; and planning for evaluation

Mission

The first step in strategic marketing is to articulate the reason why

the enterprise exists and how it can benefit Consumers target over

the long term. In particularly, This mission statement is intended to

anticipate the future and describes an Ongoing 'role for the

organization's product, service or expertise. For example, the

mission of an airline might be to Provide Continuing innovation in the

global transportation. A state hospital Could a mission to take the

lead in Improving public health and education.

Situation Analysis

Organizations conducting a situation analysis, also known as a

SWOT. A SWOT analysis is commonly used in marketing and business in general

as a method of identifying opposition for a new venture or strategy. Short for

Strengths, Weaknesses, Opportunities and Threats, this allows professionals to

identify all of the positive and negative elements that may affect any new proposed

actions. This second step in the process of strategic marketing helps

administrators understand can build on resources and the challenges

they face. Strengths and weaknesses are internal factors under the

control of the company. For example, a good image in the fashion

press would be a key force for a dress maker, while a bad

relationship with merchants of clothing would be a weakness.

Opportunities and threats arising from the external environment,

such as a strong economy or a new payroll tax.

Objectives

The third step in strategic marketing is marketing objectives. These are clear,

measurable goals that give decision makers a basis for making choices and

assessing progress. Objectives are typically expressed in terms of one or more

quantitative targets like revenue, profit, sales or market share. Importantly, each

objective must be achievable Within a fixed period of time. For example, aiming

for a five-percent increase in profits might be realistic within a year, but probably

not within one quarter.

Strategy and Evaluation

The fourth step in strategic marketing is the development of the

strategy. It comes to selecting a target market, a different group of

consumers who are highly likely to buy goods. Planners must also

choose implementation tactics specifically effective ways to use the

tools of marketing mix product, promotion, price and distribution to

reach and influence potential buyers. The fifth step, evaluation,

means specifying how, when and by whom these tactics should be

monitored and evaluated over time. 1

1.4 THE 7 PS OF MARKETING:

Once the marketing strategy is being developed, there is a "Seven P

Formula" which is being used to continually evaluate and revaluate

business activities. These seven are: product, price, promotion,

place, packaging, positioning and people. As products, markets,

customers and needs change rapidly, you must continually revisit

these seven Ps to make sure you're on track and achieving the

maximum results possible for you in today's marketplace.

Product:

To begin with, Initial feasibility and screening of the product is the

first step to consider. The analysis within company and the

consultant help to do the screening of the product to understand its

basic feature and its sustainability in the market.

Price:

Price is the another important factor to consider in “marketing mix.”.

Many companies have found that the profitability of certain products

or services does not justify the amount of effort and resources that

go into production. By increasing their prices, they may lose a

percentage of their clients, but the remaining percentage generates

a profit on each sale. Pricing according to the market conditions

always leads to profitability in long run.

Promotion:

The third concept in marketing and sales is to think in terms of

promotion all the time. Promotion includes all forms that tell

customers about products or services and then how to market and

sell to them. Small changes in the way to promote and sell products

can lead to dramatic changes in their results. Even small changes in

advertising can lead immediately to higher sales. Editors often

experienced can increase the response rate from advertising by 500

percent by simply changing the headline on an ad.

Large and small companies across all industries are continually

experimenting with different forms of advertising, promotion and

sale of their products and services. And here's the rule: any method

of marketing and sales that is used today, sooner or later, stop

working. Sometimes it will stop working for reasons that you know,

and sometimes for reasons I will not know. In any case, their

methods of marketing and sales will eventually stop working and will

have to develop new sales, marketing and advertising offers,

approaches and strategies.

Place:

The fourth P in the marketing mix is the place where the product is

being actually put for sell. Develop the habit of reviewing and

reflecting on the exact place where the customer is the seller.

Sometimes a change of place can lead to a rapid increase in sales.

One can sell the product in many different places. Some companies

use direct selling, sending their salespeople to personally meet and

talk with the prospect. Some sell by telemarketing. Some sell

through catalogs or mail. Some sell at fairs or in shops. Some sell in

joint ventures with other similar products or services. Some

companies use representatives or distributors manufacturers. Many

companies use a combination of one or more of these methods.

In each case, the entrepreneur must make the right choice about the

very best location or place for the customer to receive essential

buying information on the product or service needed to make a

buying decision. What is yours? In what way should you change it?

Where else could you offer your products or services?

Packaging:

Packaging is the fifth element in the marketing mix. Develop the

habit of stepping aside and looking at every visual element in the

packaging of your product or service through the eyes of critical

perspective. Small improvements in packaging or external

appearance of the product or service can often lead to completely

different reactions from their customers. With regard to the

packaging of a product one should think in terms of what the

customer sees from the first moment of contact.

Packing refers to how the product or service displayed externally.

Packaging also refers to the people and how to dress and groom. It

refers to their offices, waiting rooms, brochures, correspondence and

every visual element of your business. Everything counts. Everything

helps or hurts. Everything affects the confidence of its customers

about dealing with you. When IBM began under the direction of

Thomas J. Watson, Sr., concluded that early full eye contact a

customer would have with your company, at least initially, 99

percent would be represented by vendors IBM. Because IBM was

selling relatively sophisticated high-tech equipment, Watson knew

customers would have to have a high level of confidence in the

credibility of the seller. Thus, he instituted a dress and grooming

code that became a set of rules and regulations within IBM inflexible.

As a result, every salesperson was required to look like a

professional in every respect. Every element of their clothing-

including dark suits, dark ties, white shirts, conservative hairstyles,

shined shoes, clean fingernails-and every other feature gave off the

message of professionalism and competence. One of the highest

compliments a person could receive was, "You look like someone

from IBM."

Positioning:

The next P is positioning. An organization develops the habit of

thinking continually placed in the hearts and minds of the

customers. How do people think and talk about you when you are

not present? How do people think and talk about your company?

What position you in your market, in terms of the specific words

people use when they describe their offerings to others and

yourself?

In the famous book Al Reis and Jack Trout, Positioning, the author’s

note how she dresses and thought by its customers is the

determinant of your success in a competitive market. Attribution

theory says that most customers think in terms of a single attribute,

either positive or negative. Sometimes it's 'service'. Sometimes it is

"excellence." Sometimes it is the 'Quality Engineering', as Mercedes

Benz. Sometimes it is the 'Ultimate Driving Machine' as BMW. In

each case, how that attribute is deeply rooted in the minds of your

customers and potential customers determines how you will easily

buy your product or service and how much they will pay.

Develop the habit of thinking about how you could improve your

ranking. Start by determining the position you would like. If you

could create the ideal impression in the hearts and minds of your

customers, what would it be? What you should do in every

interaction with the client to reach their customers think and talk

about that specifically? What changes need to make the way

customers interact with today in order to be seen as the best option

for your customers of tomorrow?

People:

The final P of the marketing mix is people. Develop the habit of

thinking in terms of people inside and outside your business who are

responsible for all elements of your marketing and sales strategy

and activities. It's amazing how many entrepreneurs and business

people work very hard to think through every element of the

marketing strategy and marketing mix and then pay little attention

to the fact that each individual decision and policy must be

performed by a specific person, of a specific way. His ability to

select, recruit, hire and retain the right people with the skills and

abilities to do the job you need to do, is more important than

everything else together.

In his best-selling book, Good to Great, Jim Collins discovered the

most important factor applied by the best companies was that they

first of all "got the right people on the bus and the wrong people off

the bus." Once these companies had hired the right people, the

second step was to "get the right people in the right seats on the

bus."

To succeed in business, you must develop the habit of thinking in

terms of exactly who is going to perform each task and

responsibility. In many cases, you cannot move forward until you can

attract and putting the right person in the right position. Many of the

best business plans ever developed sit on shelves today because

[the people who created them] they cannot find key people who

could implement those plans.

1.5 MARKETING STRATEGY FOR SERVICE

INDUSTRY:

Marketing services are a sub area of marketing that covers the

marketing of goods and services. Marketing of products include the

marketing of fast moving and durable consumer goods (FMCG).

Marketing services typically relate to the marketing of both business

to consumer (B2C) and business-to-business (B2B). Some common

examples of marketing services are in air travel, healthcare,

financial services, telecommunications, all types of hospitality

services, car rental services and professional services.

It is a service, according to Vargo and Lusch (2004), "the application

of specialized competences (knowledge and skills) through actions,

proceedings and actions for the benefit of another entity or the

entity itself. Services are economic activities in rather than tangible

products, offered by one party to another. Providing a service to

recipients, objects or other assets depends on urgent action to

achieve the desired result. exchange for money, time and effort,

service customers expect value access goods, labor, professional

skills, facilities, networks and systems, but usually do not take

ownership of any of the physical elements involved.

Service marketing is a relatively new phenomenon in the domain of

marketing. It gained importance as a discipline towards the end of

the 20th century. Services marketing first came into force in the

1980s when there was debate of whether the marketing of services

was significantly different from that of products, and whether it

should be classified as a separate discipline. Prior to this, services

were considered as an aid to the production and marketing of goods,

and were not deemed as having separate relevance on their own.

The 1980s saw a change in this mindset. As the service sector began

to grow in importance in post-industrial societies and emerged as a

major employer and contributor to GDPs such nations, academics

and marketing professionals began to be seen in the marketing of

services in a new light. Empirical research that brought to light the

distinctive characteristics of services performed. Mid-nineties,

marketing services were firmly entrenched as a significant sub-

discipline of marketing its own empirical research and data, of

increasing importance in the service industry increasingly dominated

the economies of the new millennium. New areas of study in the

open field and were the subject of extensive empirical research. This

led to concepts such as the spectrum of the product service,

relationship marketing, service franchises, customer retention and

others.

1.6 MARKETING STRATEGY FOR TELECOM

INDUSTRY:

Developing a successful corporate strategy and marketing that

allows telecommunications companies to build a long-term

relationship with clients is at the heart of long-term success in this

rapidly evolving sector. However, as telecommunications expands

industry accelerates instead, customers are becoming increasingly

demanding and strategies tacos are often poorly aligned with the

expectations of customers that many generic approaches do not

translate well in telecommunications.

IMPLEMENTING STRATEGY IN THE TELECOM INDUSTRY :

Telecom operators in rapidly growing markets and mature are under

high pressure in today's business climate. These changes create

opportunities but there is also growing competition within the

industry and other industries. The delivery model "good enough" and

customer service subscriptions lock is under pressure - telcos must

now attract customer segments with relevant proposals and unique

value. At the same time, operating costs must be brought under

control and many telcos are planning efficiency improvements. Any

of these pressures on its own requires a change to which are not

accustomed to. Achieving both requires major changes in leadership.

Cellular Providers developed their sales and marketing strategy to

analyze its own internal forces and then analyze the current market

conditions. This process helped the cellular providers to create their

marketing and sales strategy to exploit its competitive advantages

with a unique marketing strategy and establish it as a leading

service provider in the nation for business and consumer wireless

communications. The company will create momentum through

critical mass and brand recognition. Cellular Providers will monitor

the effectiveness of their marketing efforts in order to determine the

return on advertising investment and trade generated from the

various channels.

Marketing Strategy of the Current cellular providers involves

maintaining and expanding the company a broad base of customers

in target territories, establishes partnerships with companies of

products and services that can deliver high quality products and

invoke their own organization to gather and implement these

solutions Total for customers. The overall marketing plan for the

cellular service providers is based on the following grounds:

The segment of the market(s) planned to reach.

Distribution channels planned to be used to reach market

segments: retail outlets, sales representatives, and

telemarketing.

Share of the market expected to capture over a fixed period of

time.

1.7 MAJOR TRENDS CHANGING THE WORLD OF

TELECOMS :

MCE has identified four main areas of pressure for Telecoms:

Chart 1.2

Trend 1. Competition

Competition within the industry

Competition (cooperation + competition) from “partner” industries

Result

Trend 2. Technology

Technological disruption changes customer behavior and

expectations. Ever-increasing demand for bandwidth Augmented

Media Experience My Media everywhere, anywhere Mobile Money:

Shifting your business model or bring value differently Innovation:

Make, buy, or partner?

 Trend 3. Customers

Telecom managers and employees may have a technical mindset.

But your customers do not see you as a technology. They see you as

a means of connectivity, or as a convenience. They expect

everything on demand, mobile, for free and will only pay for clear

convenience of usage (where and when I want it, and on what

device).

Connect to people

Connect to services

Connect to content

Connect “distributed” friends, relatives and colleagues

Result

Trend 4. Employees

As a result of pressure from above, people in the

telecommunications industry is facing the need for major changes in

the way they work. But in an industry with a tradition of hierarchy,

silos and do things in a certain way, how do you change? How to act

swiftly, spark innovation, build partnerships, merge with other

companies and become customer-centric?

The probable answers of the questions stated above cover the

following points :

1. Start from a clear, differentiated customer value proposition

2. Leadership to manage change

3. A management talent pool

4. MCE's Senior Associates

Senior Associates can work with individual managers or

management teams to address all people and change management

challenges facing the industries, companies and organizations today.

They draw on their years of experience in senior management and

leadership part to help solve problems and identify "what works" in

different circumstances, countries and cultures. Above all, have led

his people through the challenges of developing new skills and work

in a different way. Apply their knowledge in a wide variety of

services including:

1. Open Enrolment Workshops for Individual Managers

2. In-Company Leadership and Management Development

Workshops

3. Business Coaching and Mentoring

4. Advice on Organizational Development and Talent Management.

Thus the company needs to formulate the varied strategies to

understand the major trends in the telecom market and also need to

work on various aspects of the business development for the long

term sustainability in the market.

CHAPTER 2

RESEARCH METHODOLOGY FRAME AND LITERATURE

SURVEY

2.1 INTRODUCTION :

The growth in demand for telecom services in India is not limited to

basic telephone services. India has witnessed rapid growth in

cellular, radio paging; value added services, internet and global

communication by satellite item (GMPCS) services. As observed from

international perspective the agents of change, have been broadly

categorized into economic structure, competition policy and

technology. Economic reforms and liberalization have driven telecom

sector through several transmission channels of which these three

categories are of major significance.

Effective research cannot be accomplished without critically studying

what already exists in the form of general literature and specific

studies. Therefore, it is considered as an important pre-requisite for

actual planning and execution of research project and it helps to

formulate hypotheses and framework for further investigation. In this

work, the survey of literature has been classified into two parts -

studies related to telecom sector and studies related to marketing

strategies.

As of now, India’s telecommunications sector is now among the most

deregulated ones in the world. It presents potentially lucrative

opportunities for service providers and equipment vendors alike.

American companies that have successfully seized the opportunity

are Agilent, AT&T Cisco, HP, Hughes Network Systems, Lucent

Technologies, MCI Motorola, Qualcomm, Sprint and Tekelec.

Indian telecommunications today benefits from among the most

enlightened regulation in the region, and possibly in the world. The

sector, as it is 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 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: Mahan agar 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.

BHARTI AIRTEL LIMITED:

Bharti Airtel Limited (‘Bharti Airtel’ or ‘the Company’) was

incorporated on July 7, 1995 under the laws of India for promoting

investments in telecommunication services. Airtel is the First private

operator to offer fixed line telephony in June 04, 1998. Bharti Airtel

Limited, a group company of Bharti Enterprises, is among Asia’s

leading integrated telecom services providers with operations in

India, Sri Lanka and Bangladesh. It is the first mobile phone

company in the world to outsource everything except marketing and

sales. Bharti is now the world’s third-largest, single-country mobile

operator and fifth-largest integrated telecom operator. Airtel was the

first private player in telecom sector to connect all states of India.

Bharti Airtel has been ranked among the six best performing

technology companies in the world by Business Week. Voted India’s

most innovative company – in a survey conducted by The Wall Street

Journal in 2008.“2nd Most Trusted Service Brand” - Annual Economic

Times Brand Equity, Most Trusted Brands survey 2008. Sunil Bharti

Mittal was awarded the GSM Association Chairman’s Award 2008.

2.2 BSNL (BHARAT SANCHAR NIGAM LIMITED):

Bharat Sanchar Nigam Limited (known as BSNL, India

Communications Corporation Limited) the foundation of Telecom

Network in India was laid by the British sometime in 19th century.

The history of BSNL is linked with the beginning of Telecom in India.

In 19th century and for almost entire 20th century, the Telecom in

India was operated as a Government of India wing. It a state-owned

telecommunication company in India. It is the World's 7th largest

Telecommunications Company providing comprehensive range of

telecom services in India. BSNL is also the fourth largest cellular

service provider, with over 63.45 million customers as of March 2010

and the largest land line telephone provider in India. In 2003-2004

the company received Golden Peacock Award for best corporate

social responsibility, BSNL National Awards 2006 On World Telecom

Day 17 May, 2006 New Delhi.Govt.-run Bharat Sanchar Nigam and

private telecom giant Bharti Airtel have bagged Voice Data SAARC

Telecom Growth Engine awards based on their subscriber growth in

Internet and mobile services during the last fiscal, respectively, in

India. The announcement of Awards for exemplary implementation

of e-Governance for the year 2004-05 has brought in joy and

jubilations to BSNL.

2.3 STUDY RELATED TO TELECOM SECTOR

GROWTH AND DEVELOPMENTS IN INDIAN TELECOM

SECTOR: -

Muller (1990) in his research focuses that the success of the

mobile commerce can be attributed to the personal nature of

wireless devices. Adding to this are its unique features of voice and

data transmission and distinct features like localization, feasibility

and convenience. The sustained growth of the mobile commerce

around the world has been more because of the transfer of

technology according to the needs of local geography.

National Telecom Policy (1999) projected a target 75 million

telephone lines by the year 2005 and 175 million telephone lines by

2010 has been set. Indian telecom sector has already achieved 100

million lines. With over 100 million telephone connections and an

annual turnover of Rs. 61,000 crores, our present tele density is

around 9.1%. The growth of Indian telecom network has been over

30% consistently during last 5 years. According to Wellenius and

Stern (2001) information is regarded today as a fundamental factor

of production, alongside capital and labor. The information economy

accounted for one-third to one-half of gross domestic product (GDP)

and of employment in Organization for Economic Cooperation and

Development (OECD) countries in the 1980s and is expected to

reach 60 percent for the European Community in the year 2000.

Information also accounts for a substantial proportion of GDP in the

new industrial economies and the modern sectors of developing

countries.

Videsh Sanchar Nigam Limited (VSNL) 16th Annual Report

(2002) India like many other countries has adopted a gradual

approach to telecom sector reform through selective privatization

and managed competition in different segments of the telecom

sector. India introduced private competition in value-added services

in 1992 followed by opening up of cellular and basic services for

local area to competition. Competition was also introduced in

National Long Distance (NLD) and International Long Distance (ILD)

at the start of the current decade.

World Telecommunication Development Report (2002)

explains that network expression in India was accompanied by an

increase in productivity of telecom staff measured in terms of ratio

of number of main lines in operations to total number of staff.

Indian Telecommunication Statistics (2002) in its study showed

the long run trend in supply and demand of Direct Exchange Lines

(DEL). Potential demand for telecom services is much more than its

supply. In eventful decade of sect oral reforms, there has been

significant growth in supply of DEL.

Economic Survey, Government of India (2002-2003) has

mentioned two very important goals of telecom sector as delivering

low-cost telephony to the largest number of individuals and

delivering low cost high speed computer networking to the largest

number of firms. The number of phone lines per 100 persons of the

population which is called teledensity, has improved rapidly from

43.6 in March 2001 to 4.9 in December 2002.

Adam Braff, Passmore and Simpson (2003) focus those telecom

service providers even in United States face a sea of troubles. The

outlook for US wireless carriers is challenging. They can no longer

grow by acquiring new customers; in fact, their new customers are

likely to migrate from other carriers. Indeed, churning will account

for as much as 80% of new customers in 2005. At the same time, the

carriers Average Revenue per User (ARPU) is falling because

customers have.

Dutt and Sundram (2004) stated that in order to boost

communication for business, new modes of communication are now

being introduced in various cities of the country. Cellular Mobile

Phones; Radio Paging; E-mail; Voice-mail; Video; Text and Video-

Conferencing now operational in many cities, are a boon to business

and industry. Value- added hi-tech services, access to Internet and

Introduction of Integrated Service Digital Network are being

introduced in various places in the country.

A study by Jeanette Carless on and Salvador Arias (2004)

wireless substitution is producing significant traffic migration from

wire line to wireless and helping to fuel fierce price competition,

resulting in margin squeezes for both wired line voice tariffs in

organization for Economic Co-operation and Development Countries

have fallen by an average of three percent per year between 1999

and 2003.

T.V. Ramachandran (2005) analyzed performance of Indian

Telecom Industry which is based on volumes rather than margins.

The Indian consumer is extremely price conscious. Various socio-

demographic factors- high GDP growth, rising income levels,

booming knowledge sector and growing urbanization have

contributed towards tremendous growth of this sector. The tool that

will tie these things together and deliver the mobile revolution to the

masses will be 3 Generation (3G) services.

Rajan Bharti Mittal (2005) explains the paradigm shift in the way

people communicate. There are over 1.5 billion mobile phone users

in the world today, more than three times the number of PCOs. India

today has the sixth largest telecom network in the world up from

14th in 1995, to second largest among the emerging economies. It is

also the world’s 12th biggest market with a large pie of $ 6.4 billion.

The telecom revolution is propelling the growth of India as an

economic powerhouse while bridging the developed and the

developing economics.

ASEAN India Synergy Sectors (2005) point out that high quality

of telecommunication infrastructure is the pillar of growth for

information technology (IT) and IT enabled services. Keeping this in

view, the focus of telecom policy is the vision of world class

telecommunication services at reasonable rates. Provision of

telecom services in rural areas would be another thrust area to

attain the goal of accelerated economic development and social

change. Convergence of services is a major new emerging area.

Aisha Khan and Ruche Chaturvedi (2005) explain that as the

competition in telecom area intensified, service providers took new

initiatives to customers. Prominent among them were celebrity

endorsements, loyalty rewards, discount coupons, business solutions

and talk time schemes. The most important consumer segments in

the cellular market were the youth segment and business class

segment. The youth segment at the inaugural session of cellular

summit, 2005, the Union Minister for Communications and

Information Technology, Dayanidhi Maran had proudly stated that

Indian telecom had reached the landmark of 100 million telecom

subscribers of which 50% were mobile phone users. Whereas African

countries like Togo and Cape Verde have coverage of 90% while

India manages mobile coverage of merely 20%.

An overview in Indian infrastructure Report (2005) explains that

India’s rapidly expanding telecom sector is continuing to witness stiff

competition. This has resulted in lower tariffs and better quality of

services. Various telecom services-basic, mobile, internet, national

long distance and international long distance have seen tremendous

growth in year 2005 and this growth trend promises to continue.

Electronics and home appliances businesses are expected to be $

2.5 bn in revenues by that year. So, driving forces for manufacturing

of handsets by giants in India include-sheer size of India market, its

frantic growth rates and above all the fact that its conforms in global

standards.

Marine and Blanchard (2005) identify the reasons for the

unexpected boom in mobile networks. According to them, cell

phones, based on Global System for Mobile Communication (GSM)

standard require less investment as compared to fixed lines. Besides

this, a wireless infrastructure has more mobility, sharing of usage,

rapid profitability. Besides this, usage of prepaid cards to the extent

of 90% simplifies management of customer base. Moreover, it is

suitable to people’s way of life-rural, urban, and sub-urban

subscribers.

Illustrating the lead achieved by Gujarat. According to Business

and Economy (2005) the catalyst for Indian mobile operators in

future will undoubtedly be increased marketing and advertisement

expenditure, along with better deals for mobile phone users like the

previously mentioned full talk time Rs. 10 recharge card, will go a

long way in not only retaining customers but also acquiring the vast

market of lowered customers who are extremely sticky about value

for money and have extremely low loyalties and almost non-existent

switching costs.

According to Oliver Stehmann (2005) the telecommunications

industry is characterized by rapid innovation in the service and the

transmission market. The legally protected public or private

monopolist does not have the same incentive to foster innovation as

would exist in a competitive environment. Thus, state intervention

based on the natural monopoly argument neglects dynamic aspects,

which are crucial in the telecommunications sector.

Marketing Whitebook (2005) explains with support of detailed

data that bigger players are close to 20% of the market reach. In

CDMA market, Reliance Infocom and Tata Teleservices are

dominating the scene whereas.

According to Economic Times (2005) Indian mobile phone

market is set to surge ahead since urban India has a teledensity of

30 whereas rural India has a teledensity of 1.74. It indicates that the

market is on ascent, with more than 85000 villages yet to come

under teleconnectivity.

Airtel is leader in GSM operators. Between 2003 and 2004, the total

subscriber base of the private GSM operators doubled. It rose from

12.6 million subscribers at the end of March 2003 to 26.1 million by

the end of March 2004. And yet that 100% growth rate

notwithstanding, total industry revenue for 2003-04 was around Rs.

8308 crores. Compared to Rs. 6400 crores that industry grossed in

2002-2003, that is an increase of 30%. According to a paper

released by the Associated Chambers of commerce and

Industry of India (2005), it is stated that 30% of the new mobile

subscribers added by the operators worldwide will come from India

by 2009. Ten percent of the third generation (3G) subscribers will be

from India by 2011, Indian handset segment could be between US $

13 billion and US $ 15 billion by 2016.It offers a great opportunity for

equipment vendors to make India a manufacturing hub. Indian

infrastructure capital expenditure on cellular equipment will be

between 10 to 20% of the investment that will be made by

international operators by 2015. The other proposals included

setting up of hardware manufacturing cluster parks, conforming to

global standards and fiscal incentives for telecom manufacturing

among others.

Virat Bahri (2006) explains the viewpoint of Sam Pitroda, the

Chairman of Worldtel that identifies opportunities for investments in

telecommunications. He analyses that there is an increasing role for

telecom in e-governance in India. According to him, technology can

be leveraged to take India’s development to the next level.

According to Snyder (2006) Communications is a process that

allows information to pass between a sender and one or more

receivers and the transfer of meaningful information or ideas from

one location to a second location. Communication is a human

process; humans communicate by sending information between

them. On the other hand, telecommunication is the transmission of

data or information over a distance. Tele is a Greek word meaning at

a distance, far off. Thus, it classifies smoke signals, semaphore flags,

lanterns and signal flares, telegraph systems, televisions,

telephones, written letters, and hand signals as capabilities that

support telecommunications. The problems with these

communications forms include reliability, speed of transmission, and

comprehension purposes.

According to Rohit Prasad & V.Sridhar (2007) this is one of the

first such attempts to analyze the tradeoffs between low market

power and economics of scale for sustained growth of mobile

services in the country. Our analysis of the data on mobile services

in India indicates the existence of economies of scale in this sector.

We also calculate the upper bound on the optimal number of

operators in each license service area so that policies that make

appropriate tradeoffs between competition and efficiency can be

formulated.

Narinder K Chhiber (2008) says that the mobile

telecommunication technology is evolving rapidly in the world as

more people demand mobile services with longer bandwidth and

new innovative services like connectivity anywhere, anytime for

feature like T.V., Multimedia, Interoperability and seamless

connectivity with all types of protocols and standards. While the 3G

services are yet to fully come up serious discussion on 4G has

already started. WLAN hot spot have made inroads along with 3G to

offer an alternative form of mobile access.

2.4 TECHNOLOGY UPGRADATION IN TELECOM

SECTOR:

Uehara (1990); King (1990); Glynn (1992); Mutoh (1994)

emphasized that technological changes in the telecom and

computers have radically changed the business scenario. In turn, the

new demands of business have incited many telecom based

technological innovations. In order to exploit these innovations for

competing in global markets, business community has been putting

pressures on governments to revise the policy, regulation and

structure of the telecom sector. Several countries across the world

have responded by restructuring the state controlled telecom

provider, increasing private participation and deregulating service

provisions.

Business Today (1992) pointed out that due to lack of technical

and financial resources especially of foreign exchange, the DOT

generally lagged behind in its level of technology. India’s

indigenization program in the switching segment carried out by C-

DOT was successful with the introduction of rural exchanges

designed especially for Indian conditions characterized by dust, heat

and humidity.

According to Economic Commission for Europe (2000) this

transition of the telecommunication is mainly technology driven. The

borderline between computers and electronics, on the one hand, and

telecommunications, on the other, is disappearing. This union of

technologies has led to the acceleration of the innovation process,

which is constantly bringing forward new products and services.

Besides expanding the market potential, this innovation process has

also given rise to major changes in industry and the institutional

structure.

E Pedersen and Methlie (2002) studied the technology aspect

and explained a comparative view. According to them, a comparison

of the slow adoption of WAP services in Europe with the successful

adoption of comparable I-mode services in Japan and technologically

simple SMS based services in Scandinavia suggest that aggregate

and technology based models are insufficient to explain the mobile

service. Thus, technological models of the supply side need to be

supplemented with the views and impact of perceptions from the

demand side of the mobile commerce end user.

World Telecommunication Development Report (2002)

technologies of mobile telecommunications and internet are going to

set the contours of further technological progress in the current

decade. The most recent initiatives aim at convergence of voice and

data received from multiple sources both web based and real time

video streams in mobile handsets and calling cards have virtual

presence possible almost everywhere overcoming the barriers of

distance, topography and remoteness.

Prithipal Singh (2004) says that with the convergence of

technologies, data services are expected to grow exponentially in

the years to come. Broadband is likely to take a lead in the

development of Indian Telecom Sector. Broadband is growing market

and offers immense possibilities for investment. In Broadband policy,

India has envisaged a target of 40 million Internet subscribers and

20 million broadband subscribers by 2010.

According to P.S. Saran (2004) the telecom technology in India has

transformed from manual and electro-mechanical systems to the

digital systems. India has stepped into the new millennium by having

100% electronic switching system. The technological changes have

made way for new services and economics in the provision of

telecom services.

According to Mather (2005) the challenge, of course, is that a

competitor can show up in one of your established markets with new

technology, better people, a better network of companies for support

and a better management style and steal huge chunks of your

business before you can respond. Staying at the forefront of all these

issues will be the only way to stay successful.

GUPTA (1987) examined the factors motivating consumers to buy

durables, the factors considered by them in making the brand choice

are source of information considered, role of family members in

influencing brand choice and to examine consumer satisfaction.

SHANTI R (2005) examined the perceptual dimensions of brand

association with reference to a mobile user. SHASHI KUMAR and

CHAUBE D.S. 2007 studied the awareness level of buyers and their

attitude towards different mobile providers operating in Lakhnau.

The research undertaken by ANAND and HUNDAL (2007) about

comparative buying behavior of rural and urban consumers was with

respect to buying of refrigerators with motivating factors taken as

item of necessity, symbol of social status, advertising influence,

brand reputation and time saving device.

CHIRAG V. ERDA (2008) did a comparative study of rural and

urban buyers in Jamnagar district of Gujarat in buying mobile

phones, India, with motivating factors taken as price, quality, style,

functions, and brand.

ANIRUDDHA AKARTE (2012) says, Telecom industry in India has

witnessed double digit growth in the past ten years. The mobile

market in rural India has significant potential with number of

subscribers anticipated to grow at a CAGR of around 35% during FY

2012 - FY 2014. To make the most of the enormous potential of rural

market in India, companies need to develop specific marketing

strategies and action plans for the rural market.

DR. AMISHI ARORA (2012) has concluded that rural marketing

cannot succeed if the strategies and action plans are merely

extension of urban marketing strategies and plans. In order to make

the most of the untapped rural market in India, companies need to

understand the dynamics of rural consumers to formulate marketing

strategies specifically for rural consumers.

REKHA JAIN (2011) added Indian companies, facing harsh

competition and having refined their business models to compete in

this environment acquired the necessary expertise to venture

abroad, opportunistically building their businesses. The highly

competitive regulatory policies in India, led to the emergence of

innovative business models and creation of large domestic

companies both in services and infrastructure segment and

consequently acquiring the necessary expertise to foray abroad.

2.5 COMPETITION IN INDIA TELECOM SERVICE

SECTOR:-

Melody (1990) points out various concerns for the telecom sector

covering competition as an important one. Competition is considered

more important factor than ownership in introducing efficiency.

Further the orders in which structural adjustments take place

determine the effectiveness.

Donaldson (1994), Jussawala (1992); Jain, (1995); Wellenius

(1995), recognize that developing countries feel the important role

a responsive, business oriented, and technologically advanced

telecom sector plays in the growth of the economy. Many developing

countries accept the limitations of a monolith state monopoly in

responding to the twin challenges of spurring internal growth and

competing in a global economy.

According to Stephen Y. Walters (2003) the telecommunications

industry is being rocked by change fueled by the dawn of the

tremendous success of the internet and its technologies. For quite

some time, there has been competition in the telephony business.

Long-distance rates have seen continuous decreases for two

decades as new carriers sought to capture greater and greater

market share. Local carriers have seen competition for

interconnecting the networks of large corporate customers and for

providing them access to long-distance services. So, competition and

change are not new issues in telecommunications.

Shyamal Ghosh (2003) mentions that the most significant

development since 1999 has been the progressive reduction in

tariffs which has been facilitated by competition through multi

operator environment. The most dramatic reduction in tariff has

been from very high Rs. 16 per minute to Rs. 2 per minute.

N.M. Shanthi (2005) throws light on the factors that contributed to

the growth of telecom sectors. Various initiatives have been taken

by government in view of liberalization, privatization and de-

monopolization. The trend is expected to continue in the segment as

prices are falling as a result of competition in the segments.

Kushan Mitra (2005) analyses various factors contributing to

competition in Indian Telecom Industry. Besides lowering of prices,

increased efficiency, greater innovation, highly tech industry better

quality services are some of the reasons which are boosting

competition amongst various telecom service providers.

Michael Meltzer (2005) explains that in electronic age, the need

to manage customer relationships for profit is a marketing dilemma

that many telecommunication companies have to face.

McKenna (1991) professes a more strategic view by putting the

customer first and shifting the role of marketing from manipulating

the customer (telling and selling) to genuine customer involvement

(communicating and sharing the knowledge). (Bickert, 1992)

Another narrow, yet relevant, viewpoint is to consider CRM only as

customer retention in which a variety of post marketing tactics is

used for customer bonding or staying in touch after the sale is made.

(Vavra 1992) A more popular approach with recent application of

information technology is to focus on one-to-one relationship with

customers that integrate database knowledge with a long-term

customer retention and growth strategy.

(Peppers and Rogers, 1993) & Shani and Chalasani (1992)

define relationship marketing as “an integrated effort to identify,

maintain, and build up a network with individual consumers and to

continuously strengthen the network for the mutual benefit of both

sides, through interactive, individualized and value-added contacts

over a period of time”.

Jackson (1985) applies the individual account concept in industrial

markets to suggest CRM to mean, “Marketing oriented toward strong

lasting relationships with individual accounts”.

Berry (1995) in somewhat broader terms also has a strategic

viewpoint about CRM. He stresses that attracting new customers

should be viewed only as an intermediate step in the marketing

process. Developing closer relationship with these customers and

turning them into loyal ones are equally important aspects of

marketing. Thus, he proposed relationship marketing as “attracting,

maintaining, and {in multi-service organizations} enhancing

customer relationships”. Berry’s notion of customer relationship

management resembles that of other scholars studying services

marketing.

Gronroos (1990), Gummesson (1987), and Levitt (1981)

Although each of them is espouse the value of interactions in

marketing and its consequent impact on customer relationships,

Gronroos and Gummesson take a broader perspective and advocate

that customer relationships ought to be the focus and dominant

model of marketing. For Gronroos (1990) states: “Marketing is to

establish, maintain and enhance relationships with customers and

other partners, at a profit, so that the objectives of the parties

involved are met. This is achieved by a mutual exchange and

fulfillment of promises”. The implication of Gronroos definition is that

customer relationships is the raison de enter of the firm and

marketing should be devoted to building and enhancing such

relationships.

Morgan and Hunt (1994) draw upon the distinction made between

transactional exchanges and relational exchanges by Dwyer,

Schurr, and Oh (1987)57, to suggest that relationship marketing

“refers to all marketing activities directed towards establishing,

developing, and maintaining successful relationships.”

STUDY RELATED TO MARKETING STRATEGY: -

Strategy is the fundamental pattern of present and planned

objectives, resources, developments and interactions of

organizations with markets, competitors and other environmental

factors.(Mullins,Walker,Beyd &Larreche, 2002 ) for this reason ,

a good strategy should always specify;

1. What is to be accomplished?

2. Where – the product, market, or industries that are to be

focused.

3. How – resources and activities that will be allocated to each

market/ product to gain sustainable competitive advantage.

Marketing is a process for analyzing, planning and managing the

organization’s resources while identifying and serving current and

potential client group and their needs profitability.

Reason for developing marketing strategy Dirks & Danniel (1991)

mention that company managers choose to introduce and / or

reemphasize marketing strategy for a number of reasons, which may

range from personal interests to corporate policies. However the

reason usually centers around an opportunity or an identified

problem that the company management needs to explore.

According Armstrong, Kotler,Cunningham & Mitchell (2004)

strategic marketing planning are documents that outline in detail the

marketing strategies which will help a company, product or brand to

accomplish its overall business objectives.

Nagasimha Kanagal (2006) in their study focused on marketing

aids in the understanding of consumer needs and wants, which is

useful to implement profitable exchanges. Relationship marketing

helps customizing solutions to important customers, more efficiently

than otherwise. Knowledge and application of relationship marketing

helps in achieving customer satisfaction, customer retention and

customer acquisition. Relationship marketing is a tool of furthering

the customer understanding and interactive processes. Relationship

marketing outputs can thus be profitably used, as inputs in product

design and development, want identification, improving selling

systems, pricing strategies. It is one of the supports to systematic

action setting in competitive marketing strategy.

According to Donath (1999) places overemphasis on price and

product as marketing instruments and an under emphasis on place

and promotion. A danger exists that organizations will there for

make a misallocation of organizational resources between the four

marketing mix instruments (Chintaganta & Vikassinh, 1994).

2.6 STUDY RELATED TO CONSUMER BEHAVIOUR: -

Consumer decision making process is usually guided by already

formed preferences for a particular alternative. This means that

consumers are likely to make the choice between alternatives based

on limited information search activity and without detailed

evaluation of the other alternatives (Alba and Hutchinson, 2000;

Chernev, 2003).The researcher found that many decision

strategies used by consumers can change due to person, context

and task specific factor (Dhar, Nowlis and Sherman, 2000).

It is widely accepted that the traditional problem solving approach

involving rational decision making to the study of consumer choice

may not be suitable for all situations, or is at least incomplete to

understand choice behavior. Limited information search and

evaluation of alternatives led to a situation in which consumer

choice is also driven by hedonic considerations (Dhar and

Wertenbroch, 2000).

SURVEY PROJECT: -

Kalavani (2006) in their study analyzed that majority of the

respondents have given favorable opinion towards the services but

some problems exist that deserve the attention of the service

providers. They need to bridge the gap between the services

promised and services offered. The overall customer attitude

towards cell phone services is that they are satisfied with the

existing services but still want more services to be provided.

Seth et al (2008) in their study titled “Managing the Customer

Perceived Service Quality for Cellular Mobile Telephone: an Empirical

Investigation” analyzed that there is relative importance of service

quality attributes and showed that responsiveness is the most

important dimension followed by reliability, customer perceived

network quality, assurance, convenience, empathy and tangibles.

This would enable the service providers to focus their resources in

the areas of importance. The research resulted in the development

of a reliable and valid instrument for assessing customer perceived

service quality for cellular mobile services.

Kalpana and Chinnadurai (2006) in their study titled

“Promotional Strategies of Cellular Services: A Customer

Perspective” analyzed that the increasing competition and changing

taste and preferences of the customer’s all over the world are

forcing companies to change their targeting strategies. The study

revealed the customer attitude and their satisfaction towards the

cellular services in Coimbatore city.

All the studies have different dimensions and have covered the

various facets of marketing and have given various interpretations.

The present study is an attempt to more precisely cover the

comparison of the two leading operators of the telecom industry in

two different sectors .The focus of the study is to derive out the

significant difference between the marketing compositions of Airtel

& BSNL and also find out the consumer preference of the same

specifically in the Bhopal region.

NOTEWORTHY CONTRIBUTION OF THE PROPOSED RESEARCH

WORK:

Various scholars have given their findings in the telecom field and

have significantly contributed to the research area related to the

telecom sector. By doing Comparative analysis between the two

leaders in the public and private sector under telecom industry the

present research will be able to give an overview of the strategies

related to market and brand building. The research will be giving a

brief description as to how, with the help of effective market plans

and sound techniques, a company can become a leader in the

market and also provide a relationship model with the help of this a

firm can understand that what are the prospective areas where the

strategies have positive and significant bearings.

2.7 MEANING AND CONCEPT OF RESEARCH

Research comprises "creative work undertaken on a systematic

basis in order to increase the stock of knowledge, including

knowledge of man, culture and society, and the use of this stock of

knowledge to devise new applications." It is used to establish or

confirm facts, reaffirm the results of previous work, solve new or

existing problems, support theorems, or develop new theories. A

research project may also be an expansion on past work in the field.

To test the validity of instruments, procedures, or experiments,

research may replicate elements of prior projects, or the project as a

whole. The primary purposes of basic research (as opposed

to applied research) are documentation, discovery, interpretation, or

the research and development (R&D) of methods and systems for

the advancement of human knowledge. Approaches to research

depend on epistemologies, which vary considerably both within and

between humanities and sciences. There are several forms of

research: scientific, humanities, artistic, economic, social,

business, marketing, practitioner research, etc.

2.8 FORMS OF RESEARCH

Scientific research relies on the application of the scientific

method, a harnessing of curiosity. This research

provides scientific information and theories for the explanation of

the nature and the properties of the world. It makes practical

applications possible. Scientific research is funded by public

authorities, by charitable organizations and by private groups,

including many companies. Scientific research can be subdivided

into different classifications according to their academic and

application disciplines. Scientific research is a widely used criterion

for judging the standing of an academic institution, such as business

schools, but some argue that such is an inaccurate assessment of

the institution, because the quality of research does not tell about

the quality of teaching (these do not necessarily correlate totally)

Research in the humanities  involves different methods such as

for example hermeneutics and semiotics, and a different, more

relativist epistemology. Humanities scholars usually do not search

for the ultimate correct answer to a question, but instead explore the

issues and details that surround it. Context is always important, and

context can be social, historical, political, cultural or ethnic. An

example of research in the humanities is historical research, which is

embodied in historical method. Historians use primary sources and

other evidence to systematically investigate a topic, and then to

write histories in the form of accounts of the past.

Artistic research, also seen as 'practice-based research', can take

form when creative works are considered both the research and the

object of research itself. It is the debatable body of thought which

offers an alternative to purely scientific methods in research in its

search for knowledge and truth.

2.9 STEPS IN CONDUCTING RESEARCH

Research is often conducted using the hourglass model structure of

research. The hourglass model starts with a broad spectrum for

research, focusing in on the required information through the

method of the project (like the neck of the hourglass), then expands

the research in the form of discussion and results. The major steps in

conducting research are:

Identification of research problem

Literature review

Specifying the purpose of research

Determine specific research questions or hypotheses

Data collection

Analyzing and interpreting the data

Reporting and evaluating research

Communicating the research findings and, possibly,

recommendations

The steps generally represent the overall process, however they

should be viewed as an ever-changing iterative process rather than

a fixed set of steps. Most researches begin with a general statement

of the problem, or rather, the purpose for engaging in the study. The

literature review identifies flaws or holes in previous research which

provides justification for the study. Often, a literature review is

conducted in a given subject area before a research question is

identified. A gap in the current literature, as identified by a

researcher, then engenders a research question. The research

question may be parallel to the hypothesis. The hypothesis is the

supposition to be tested. The researcher(s) collects data to test the

hypothesis. The researcher(s) then analyzes and interprets the data

via a variety of statistical methods, engaging in what is known

as Empirical research. The results of the data analysis in confirming

or failing to reject the Null hypothesisare then reported and

evaluated. At the end the researcher may discuss avenues for

further research.

Rudolph Rummel says, "... no researcher should accept any one or

two tests as definitive. It is only when a range of tests are consistent

over many kinds of data, researchers, and methods can one have

confidence in the results."

2.10 RESEARCH PROCESS:-

This study is a micro level and it will cover specific area of telecom

services provided by BSNL and Airtel. Now a days service sector is

contributing significantly in our GDP. The Indian GDP comprises

three major sections i.e. service sector, industrial sector and

agriculture sector. The service sector contributing 56%, industry

sector contributing 27% and agriculture sector contributing 17% to

our GDP. Telecommunication industry plays a vital role for the

development of our economy. Telecommunication is very helpful in

industries, trade, technology, armed forces and in domestic use. This

study will be based on primary and secondary data. Major source of

secondary data are annual report, budget, statistical report and

published document and the source of primary data will be

questionnaire, survey, observation and opinions. The questionnaire

will be filled up from various respondents in Bhopal city of Madhya

Pradesh, India, those who are using the services of BSNL and Airtel.

Both the data will be used in this study. Apart from these data the

marketing strategies of BSNL and Airtel will be studied which will

based on secondary data. The data which are collected in the study

through primary source and secondary source will be tested by

statistical and research tools like mean, growth rate, standard

deviation, chi-square test and co-efficient of co-relation. These

research tools will examine the significance of data, whether this

study is significant or insignificant. This study will be covered in 8

chapters as per details given in chapterisation. This study will cover

Bhopal city of Madhya Pradesh in India.

2.11 OBJECTIVES FOR THE PROPOSED RESEARCH

WORK:-

The research will be conducted while keeping in view the following

objectives.

i. To analyze the concept of Marketing Strategy.

ii. To analyze the Marketing Strategy planning process and

implication for the different telecom companies in India.

iii. To study Marketing Strategy of Bharat Sanchar Nigam

Limited.

iv. To study Marketing Strategy of Bharti Airtel Limited.

v. To study comparative analysis of marketing strategy of

Bharat Sanchar Nigam Limited and Bharti Airtel Limited.

vi. To give suggestions on the basis of findings of the study.

2.12 RESEARCH METHODOLOGY FOR PROPOSED

RESEARCH WORK:-

This study is a micro level and it will cover specific area of telecom

services provided by BSNL and Airtel. Now a day’s service sector is

contributing significantly in our GDP. The Indian GDP comprises

three major sections i.e. service sector, industrial sector and

agriculture sector. The service sector contributing 56%, industry

sector contributing 27% and agriculture sector contributing 17% to

our GDP. Telecommunication industry plays a vital role for the

development of our economy. Telecommunication is very helpful in

industries, trade, technology, armed forces and in domestic use. This

study will be based on primary and secondary data. Major source of

secondary data are annual report, budget, statistical report and

published document and the source of primary data will be

questionnaire, survey, observation and opinions.

2.13 HYPOTHESIS OF PROPOSED RESEARCH

WORK: -

Null Hypothesis of the proposed research work.

H01: There is no significant difference in the Marketing Strategy of

Bharat Sanchar Nigam Limited and Bharti Airtel Limited.

H02: There is no significant contribution of Marketing Strategy in

the development of Bharat Sanchar Nigam Limited.

H03: There is no significant contribution of Marketing Strategy in

the development of Bharti Airtel Limited.

2.14 RESEARCH DESIGN:

For the purpose of research qualitative research design is being

used. The data will be collected with the help of systematic sampling

and relevant statistical tools will be applied to calculate the

interpretation.

2.15 LIMITATIONS OF THE PROPOSED RESEARCH

WORK:-

Following are the expected limitations of the proposed research work

i. The study is based on the primary and secondary data

therefore it would be difficult to assert the reliability of

collected data.

ii. The researched does not belong to the telecommunication

field hence it would be possible that some technical

aspects related to the telecommunication industry may be

ignored.

iii. Generally companies do not disclose their marketing

strategies due to some strategies due to some strategic

issues. Due to this reason, data collected form the

respondents may not be reliable and biasness might be

seen in some aspects.

iv. The area of the proposed research work is very vast

hence it would be difficult to cover all the aspects related

to the research topic.

In addition to the above mentioned limitations, the researched may

face more problems during the research period because the

environment and circumstances keep on changing along with time.

As the time passes the environment and circumstances also change.

However the researched will try to conduct the research work

honestly and will try to keep the accuracy in research work.

2.16 EXPECTED OUTCOMES OF THE PROPOSED

WORK:-

i. At the end of the research work it is assumed that the work

will be able to depict the current trend in telecom sector

and the future prospects and challenges.

ii. The comparative analysis of marketing strategies of the

firms taken under study will surely give an insight of how

the marketing strategies play a leading role in the firm’s

overall performance as well as the difference in their

application at various stages of product life cycle.

iii. The study will propose a relationship between the various

marketing strategies opted by BSNL and Bharti Airtel with

the variables which have direct bearing of these strategies.

2.17 JUSTIFICATION OF PROPOSED RESEARCH

TOPIC:-

By seeing the current volatile environment of the telecom industry in

the present scenario it is imperative to analyze and compare the

marketing strategies of the telecom leaders specifically in the state

areas so as to understand the details of the strategies and the

reason behind to construct the strategy.

CHAPTER 3

INDIAN TELECOM INDUSTRYAND ITS TRENDS

3.1 ORIGIN AND HISTORY OF TECOMMUNICATION

INDUSTRY IN INDIA:

The history of Indian telecom can be started with the beginning

of telegraph. The Indian postal and telecom sectors are one of the

world’s oldest. In 1850, the first experimental electric telegraph line

was started between Calcutta and Diamond Harbour. In 1851, it was

opened for the use of the British East India Company. The Posts and

Telegraphs department occupied a small corner of the Public Works

Department, at that point. Consequently, the construction of 4,000

miles (6,400 km) of telegraph lines connecting Kolkata (then

Calcutta) and Peshawar in the north by the side of Agra,

Mumbai (Bombay) through Sindwa Ghats, and Chennai (Madras) in

the south, in addition to Ootacamund and Bangalore was started in

November 1853. William O'Shaughnessy, who pioneered the

telegraph and telephone in India, belonged to the Public Works

Department, and worked towards the development of telecom

during this period. A separate department was opened in 1854 when

telegraph facilities were opened to the community.

Here 1880, two telephone companies namely The Oriental

Telephone Company Ltd. and The Anglo. Indian Telephone Company

Ltd. approached the Government of India to establish telephone

exchanges in India. The permission was refused on the basis that the

establishment of telephones was Government domination and that

the Government itself would undertake the work. In 1881, the

Government later reversed its prior decision and a license was

granted to the Oriental Telephone Company Limited of England for

opening telephone exchanges -,  telephone service was established

in the country On 28 January 1882, Major E. Baring Member of

the Governor General of India's Council declared open the Telephone

Exchanges in Calcutta, Bombay and Madras The exchange in

Calcutta named the "Central Exchange had a total of 93 subscribers

in its early stage. Later that year Bombay also witnessed the

opening of a telephone exchange

3.2 DEVELOPMENT & MILESTONE :

Pre-1902 – Cable telegraph

1902 – First wireless telegraph station established

among Sagar Island and Sandhead.

1907 – First Central Battery of telephones launched in Kanpur.

1913–1914 – First Automatic Exchange installed in Shimla.

1927 – Radio-telegraph system between the UK and India,

with Imperial Wireless Chain beam stations

at Khadki andDaund. Inaugurated by Lord Irwin on 23 July by

exchanging greetings with King George V.

1933 – Radiotelephone system inaugurated between the UK

and India.

1953 – 12 channel carrier system introduced.

1960 – First subscriber trunk dialling route commissioned

between Lucknow and Kanpur.

1975 – First PCM system commissioned between Mumbai City

and Andheri telephone exchanges.

1976 – First digital microwave junction.

1979 – First optical fiber system for local junction

commissioned at Pune.

1980 – First satellite earth station for domestic

communications established at Sikandarabad, [[Uttar Pradesh|

U.P.] Noida Sector 62SCMS

1983 – First analogue Stored Programme Control exchange

for trunk lines commissioned at Mumbai.

1984 – C-DOT established for indigenous development and

production of digital exchanges.

1995 – First mobile telephone service started on non-

commercial basis on 15 August 1995 in Delhi.

1995 – Internet Introduced in India starting with laxmi nagar

delhion 15 August 1995.

Development of Broadcasting: Radio broadcasting be initiated in

1927 but became state responsibility only in 1930. In 1937 it was

given the name All India Radio and since 1957 it has been

called Akashvani. Limited duration of television programming began

in 1959, and complete broadcasting followed in 1965. The Ministry of

Information and Broadcasting owned and maintained the audio-

visual device—including the television channel Doordarshan—in the

country former to the economic reforms of 1991. In 1997, a self-

governing body was established in the name of Prasar Bharti to take

care of the public service broadcasting under the Prasar Bharti Act.

All India Radio and Doordarshan, which prior were working as media

units under the Ministry of I&B became constituents of the body.

Pre-liberalisation statistics: although all the major cities and

towns in the country were associated with telephones during the

British period, the total number of telephones in 1948 numbered

only approximately 80,000. Post independence, growth remained

slow because the telephone was seen more as a status symbol

rather than being a device of utility. The number of telephones grew

laid-back to 980,000 in 1971, 2.15 million in 1981 and 5.07 million in

1991; the year economic reforms were initiated in the country.

3.3 LIBERALISATION AND PRIVATISATION :

Liberalization of Indian telecommunication industry in progress1981

when Prime Minister Indira Gandhi signed contracts with Alcatel

CIT of France to join together with the state owned Telecom

Company (ITI), in an endeavor to set up 5,000,000 lines per year.

But quickly the policy was disappointment because of political

opposition. Attempts to liberalize the telecommunication industry

were continued by the following government under the prime-

minister-ship of Rajiv Gandhi. He invited Sam Pitroda, a US-

based Non-resident Indian NRI and a previous Rockwell

International executive to set up a Centre for Development of

Telematics(C-DOT) which manufactured electronic telephone

exchanges in India for the first time. Sam Pitroda had a important

role as a consultant and adviser in the development of

telecommunication in India.

In 1985, the Department of Telecom (DoT) was alienated from Indian

Post & Telecommunication Department. DoT was responsible for

telecom services in whole country until 1986 when Mahanagar

Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam

Limited (VSNL) were fixed out of DoT to run the telecom services of

metro cities(Delhi and Mumbai) and international long distance

operations correspondingly

The demand for telephones was increasingly and in the 1990s Indian

government was under increasing pressure to open up the telecom

sector for private investment as a part of Liberalisation-Privatisation-

Globalisation policies that the government had to accept to

overcome the rigorous fiscal disaster and resultant balance of

payments issue in 1991. Accordingly, private investment in the

sector of Value Added Services (VAS) was permitted and cellular

telecom sector were opened up for competition from private

investments. It was during this era that the Narsimha Rao-led

government introduced the National Telecommunications policy

(NTP) in 1994 which brought changes in the following areas:

ownership, service and regulation of telecommunications

infrastructure. The policy commence the concept

of telecommunication for all and its vision was to expand the

telecommunication facilities to all the villages in India. Liberalisation

in the basic telecom sector was also envisaged in this policy. They

were also successful in establishing joint ventures between state

owned telecom companies and international players. Foreign firms

were appropriate to 49% of the total venture. The multi-nationals

were just involved in technology transfer, and not procedure making.

Throughout this period, the World Bank and ITU had advised the

Indian Government to liberalise long distance services to liberate the

monopoly of the state owned DoT and VSNL and to permit

competition in the long distance carrier business which would help

decrease tariffs and enhanced the financial system of the country.

The Rao run government instead liberalised the local services, taking

the opposite political parties into self-reliance and assuring foreign

involvement in the long distance business after 5 years. The country

was divided into 20 telecommunication circles for basic telephony

and 18 circles for mobile services. These circles were separated into

category A, B and C depending on the value of the revenue in each

circle. The government threw open the bids to one private company

per circle along with government owned DoT per circle. For cellular

service two service providers were permitted per circle and a 15

years license was given to each provider. throughout all these

enhancement, the government did face oppositions from ITI, DoT,

MTNL, VSNL and other labour unions, but they deal with to keep

away from all the obstacle.

In 1997, the government set up TRAI (Telecom Regulatory Authority

of India) which reduced the obstruction of Government in deciding

tariffs and policy creation. The political powers distorted in 1999 and

the new government under the leadership of Atal Bihari

Vajpayee was more pro-reforms and launched better liberalization

policies. In 2000, the government constituted the Telecom Disputes

Settlement and Appellate Tribunal (TDSAT) through an amendment

of the TRAI Act, 1997.The primary objective of TDSAT's

establishment was to liberate TRAI from adjudicatory and dispute

settlement functions in order to strengthen the regulatory

framework. Any dispute involving parties like licensor, licensee,

service provider and consumers are resolved by TDSAT. Moreover,

any direction, order or decision of TRAI can be challenged by

appealing in TDSAT.The government corporatised the operations

wing of DoT on 1 October 2000 and named it asDepartment of

Telecommunication Services (DTS) which was later named as Bharat

Sanchar Nigam Limited (BSNL). The proposal of raising the stake of

foreign investors from 49% to 74% was rejected by the opposite

political parties and leftist thinkers. Domestic business groups

wanted the government to privatise VSNL. Finally in April 2002, the

government decided to cut its stake of 53% to 26% in VSNL and to

throw it open for sale to private enterprises. TATA finally took 25%

stake in VSNL.

This was an entrance to many foreign investors to get entry into the

Indian Telecom Markets. After March 2000, the government became

more liberal in making policies and issuing licenses to private

operators. The government auxiliary reduced license fees for cellular

service providers and increased the allowable risk to 74% for foreign

companies. Because of the entire factors, the service fees finally

reduced and the call costs were cut greatly enabling every common

middle-class family in India to afford a cell phone. Nearly 32 million

handsets were sold in India. The data reveals the real potential for

growth of the Indian mobile market.Many private operators, such

as Reliance Communications, Tata Indicom, Vodafone, Loop Mobile,

Airtel, Idea etc., successfully entered the high potential Indian

telecom market.

In March 2008 the total GSM and CDMA mobile subscriber base in

the country was 375 million, which represented a nearly 50% growth

when compared with previous year.As the unbranded Chinese cell

phones which do not have International Mobile Equipment

Identity (IMEI) numbers pose a serious security risk to the

country, Mobile network operators therefore balanced the usage of

around 30 million mobile phones (a propos 8% of all mobiles in the

country) by 30 April. Phones exclusive of valid IMEI cannot be linked

to cellular operators. 5–6 years the average monthly subscribers

trappings were around 0.05 to 0.1 million only and the total mobile

subscribers base in December 2002 stood at 10.5 millions.

The telephony subdivision is conquered by private-sector and two

state-run businesses. Most companies were created by a recent

revolution and restructuring launched within a decade, directed

by Ministry of Communications and IT, Department of

Telecommunications and Minister of Finance. Seeing as, most

companies gained 2G, 3G and 4G licenses and engaged fixed-line,

mobile and internet business in India. On landlines, intra-circle calls

are considered local calls while inter-circle are measured long

distance calls. Foreign Direct Investment policy which improved the

foreign ownership cap from 49% to 74%.at present it is 100%. Now

Government is working to integrate the whole country in one

telecom circle. For long distance calls, the area code prefixed with a

zero is dialled first which is then followed by the number (i.e. to

call Delhi, 011 would be dialled first followed by the phone number).

On behalf of international calls, "00" must be dialled first followed by

the country code, area code and local phone number. The country

code for India is 91. Several international fibre-optic associations

include those to Japan, South Korea, Hong Kong, Russia, and

Germany. Some major telecom operators in India consist of Airtel,

Vodafone, Idea, Aircel, BSNL, MTNL, Reliance Communications, TATA

Teleservices, Infotel, MTS, Uninor, TATA DoCoMo, Videocon, Augere,

Tikona Digital.

Fixed Telephony

awaiting the New Telecom Policy was announced in 1999, only the

Government owned BSNL and MTNL were permitted to provide land-

line phone services through copper wire in India with MTNL operating

in Delhi and Mumbai and BSNL servicing all other areas of the

country. Due to the rapid growth of the cellular phone industry in

India, landlines are facing stiff competition from cellular operators.

This has compulsory land-line service providers to become more

competent and improve their excellence of service. Land-line

connections are now also available on demand, even in high density

urban areas. India has over 31 million main line patrons.

According to data supplier by Minister of State for Communications

and IT Milind Deora, as of 30 November 2012, India has

736,654 base transceiver stations (2G GSM  & CDMA, and 3G). Of

those, 96,212 base transceiver stations supply 3G mobile and data

services. Out of India's 640 districts, 610 districts are covered by 3G

services as of 30 November 2012.

India is the world’s highest growing industry in the world in

provisions of number of wireless connections after China, with

811.59 million mobile phone subscribers.

According to the world telecommunications industry, India will have

1.200 billion mobile subscribers by 2013.

Globalization, liberalization and privatization are the three most

spoken words in today's world. These initiatives lined way for all-

round reforms, especially in developing economies like India. These

countries realized that development of effective and efficient means

of Communications and information technology is important to push

them against the path of development. The growth of the telecom

sector in India during post-liberalization has been phenomenal. This

research aims to throw light on the factors that contributed to

growth in the segment and presents an insight on the present status

of the industry.

yet before the declaration, many developing countries had started

liberalizing their inner policies to allow efficiency as to affordability

as an reach capability of telecommunication system by 1995, most

of the low income developing countries of the world, made their

economies global, by liberalizing the domestic licensing and

important policies on the whole, to facilitate inflow of foreign capital

into the infrastructure sector, mainly in the telecommunication

sector.

Outcomes in a telecom revaluation, with countries adopting

liberalization initiates, experiencing a "never-before" growth in the

telephone network, including the penetration levels. Developing

countries today account for Developing countries today account for

49% of the total telephone set of connections in the world. While in

East Asia (including China) the total teledensity grew at a rapid

velocity to reach 27.4 in 2002 the teledensity grew at a slower

velocity in south Asia (Including India), to reach 4.5 in 2002. This is

due to deficiency in government regulatory and licensing policies in

the 90s in most of the South Asian countries. Although was

imbalanced developing in ICT among the developing countries, in

individual enlargement in telecom, country-wise also showed a

partial development, where the development in other divisions apart

from cellular was snail-paced. This was due to exceptional growth in

the cellular segment, whose major contribution was in the direction

of urban telephony.

3.4 OBJECTIVES OF TELECOMMUNICATION

INDUSTRY :

1. Policy, Licensing and Coordination matters relating to

telegraphs, telephones, wireless, data, facsimile and telematic

services and other like forms of communications.

2. International cooperation in matters connected with

telecommunications including matters relating to all

international bodies dealing with telecommunications such as

International Telecommunication Union (ITU), its Radio

Regulation Board (RRB), Radio Communication Sector (ITU-R),

Telecommunication Standardization Sector (ITU-T),

Development Sector (ITU-D), International Telecommunication

Satellite Organization (INTELSAT), International Mobile Satellite

Organization (INMARSAT), Asia Pacific Telecommunication

(APT).

3. Promotion of standardization, research and development in

telecommunications.

4. Financial assistance for the furtherance of research and study in

telecommunications technology and for building up adequately

trained manpower for telecom programme, including-

a. Assistance to institutions, assistance to scientific

institutions and to universities for advanced scientific study

and research; and

b. Grant of scholarships to students in educational institutions

and other forms of financial aid to individuals including

those going abroad for studies in the field of

telecommunications.

5. Procurement of stores and equipment required by the

Department of Telecommunications

3.5 TREND IN INDIAN TELECOM INDUSTRY

India has become one of the fastest growing mobile markets in the

world. The mobile services were commercially introduced in August

1995 in India. In the early 506 years the average monthly

subscribers additions were around 0.05 to 0.1 million only and the

total mobile subscribers stand in December 2002 stood at 10.5

millions. However, after the number of proactive proposal taken by

regulator and licensor, the monthly mobile subscriber additions

increased to around 2 million per month in the year 2003-04 and

2004-05.

The total number of telephone subscribers has reached 202.74

million at the end of February 2007. The overall tele-density has

increased to 18.26 in February 2007. The total wireless subscriber

(GSM CDMA & WLL (F) base is 162.53 million. Whereas in the wire

line segment with the minor reduction in subscriber base by 0.01

million lines in February 2007, the whole wire line subscribers are

40.39 million.

On the lines of previous three years, the years 2005-06 also

witnessed a phenomenal growth in the subscriber base for mobile

services, and also increase in the subscriber base of Fixed including

WLL (F) services as well as Internet services, thus building on the

development trend in subscriber stand experienced since mid-1990s.

The mobile Industry crossed the 90.14 million subscriber mark at the

end of the financial year in assessment to the subscriber base of

52.22 million at the end of March, 2005. It further 37.92 million

subscribers in the financial year 2005-06 registering an annual

growth rate of about 72.62%. The subscriber stand of Fixed including

WLL (F) services also grew from 46.19 million at the end of March,

2005 to 50.17 million at the end of March, 2006, registering a growth

rate of about 8.62%.

The Internet subscriber base in the country as of 31st March, 2006

stood at 6.93 million as compared to 5.55 million throughout the

preceding year, and registered an annual growth rate of about 25%.

The teledensity at the end of March, 2006 reached to the mark of

14% as compared to 9.08% at the end of preceding year recording

an increase of 4.92%.

This annual growth in teledensity is exceptional and this was largely

due to steep increase in mobile subscriber base and the various

innovative tariff plans launched by the mobile service providers. This

growth in tele-density also becomes very significant in view of the

fact that overall increase in tele-density during the 50 years period

from 1948 to 1998 on a much smaller population stand was only

1.92%.

Pager Services:-

Pager communication successfully introduced in India in the year

1995. Pagers were looked upon as devices that presented the much

needed mobility in communication, mainly for businesses. Motorola

was a major player with nearly 80 per cent of the market share. The

other companies included Mobilink, Page link, BPL, Usha Martin

telecom and Easy call. Pagers were generally worn on the buckle or

carried in the pocket.

The business worn out in 1998 with the subscriber base reaching

nearly 2 million. However, the number dropped to less than 500,000

in 2002. The pager companies in India were soon struggling to

maintain their business. While 2-way pagers could have buffered the

fall, the pager companies were not in a position to promote their

infrastructure to get better the ailing market. The Indian Paging

Services Association was powerless to support the industry.

Pager companies in India also offered their services in regional

languages also. But, the end had begun already. By 2002, Motorola

stops making or servicing pagers. When mobile phones were

commercially introduced in India, the pager had many advantages to

boast. Pagers were smaller, had a longer battery life and were

considerably cheaper. However, the mobile phones got better with

time and continuously upgraded themselves.

MOBILE COMMUNICATION: -

First mobile telephone service on non-commercial basis started in

India on 48th Independence Day at country’s capital Delhi. The first

cellular call was made in India on July 31st, 1995 over Modi Telstra’s

Mobile Net GSM network of Kolkata. Later mobile telephone services

are divided into various zones known as circles. Competition has

sourced prices to drop and calls across India are one of the cheapest

in the world.

Most of operator follows GSM mobile system operate under 900MHz

bandwidth few current players started operating under 1800MHz

bandwidth. CDMA operators operate under 800Mhz band, they are

first to introduce EVDO based high speed wireless data services via

USB dongle. In spite of this huge growth Indian telecom sector is hit

by severe spectrum crunch, corruption by India Govt. officials and

financial troubles.

In 2008, India entered the 3G arena with the launch of 3G enabled

Mobile and Data services by Government owned MTNL and BSNL.

afterward from November 2010 private operator’s in progress to

introduce their services.

Broadband communication:-

After US, Japan, India stands in third largest Internet users of which

40% of Internet used via mobile phones. India ranks one of the

lowest providers of broadband speed as compared countries such as

Japan, India and Norway. Minimum broadband speed of 256kbit/s but

speed above 2Mbits is still in a nascent stage.

Year 2007 had been declared as “Year of Broadband” in India.

Telco’s based on ADSL/VDSL in India generally have speeds up to

24Mbit max while those based on newer Optical Fiber technology

offer up to 100Mbits in some plans Fiber-optic communication

(FTTx). Broadband growth has been plagued by many problems.

Complicated tariff structure, metered billing, High charges for right

of way, Lack of domestic content, non implementation of Local-loop

unbundling have all resulted in hindrance to the growth of

broadband.

Many experts think future of broadband is on the hands of wireless

factor. BWA auction winners are expected to roll out LTE and WiMAX

in India in 2012.

3.6 CONTRIBUTION OF TELECOM IN SERVICE

SECTOR :

The history of the Indian Telecom sector goes way back to 1851,

when the first operational landlines were laid by the British

Government in Calcutta. All foreign telecommunication companies

were nationalized to form post, Telephone and Telegraph, a

monopoly run by the Government of India.

The Indian Telecom Sector, like most other infrastructure sectors is

controlled by the state. The Department of Telecommunications

(DoT), reporting to the Ministry of Communication (MoC) is the key

body for policy issues and regulation, apart from being a basic

service provider to rest of country. By an act of Parliament, the

Telecom Regulatory Authority of India (TRAI) was formed to be the

regulatory agency.The total number of telephone connections

reaches 413.85 million in February 2009. With this growth, the

overall tele-density has reached 35.65 in February 2009 as against

18.26 in February 2007. The total wireless subscribers (GSM, CDMA

& WLL (F) base stood at 391.76 million at the end of March 2009. In

the wire line segment, the subscriber base has increased to 37.96

million in the month of March 2009 as against 37.73 million

subscribers in February 2009 registering an increase of 0.23 million.

The total number of telephone connections reaches 452.91 million at

the end of May 2009. With this growth, the overall teledensity has

reached 38.88 at the end of May 2009. The total wireless subscribers

(GSM, CDMA & WLL (F) base stood at 415.25 million at the end of

May 2009.

In the wire line segment, the subscriber base has decreased to 37.66

million in the month of May 2009 as against 37.81 million

subscribers in April 2009 registering a small decrease of 0.15 million.

The number of telephone subscribers in India increased to 509.03

million at the end of Sept 09 from 494.07 Million in August 2009,

thereby registering a growth rate of 3.03%. With this, the overall

Tele-density in India reaches 43.50. The set target of 500 million

telephones by the end of 2010 has been achieved by September

2009. Wireless subscriber base enlarged from 456.74 Million in

August 2009 to 471.73 Million at the end of September 09 at a

monthly growth rate of 3.28%. Wireless Tele-density stands at 40.31.

Wireline subscriber base declined from 37.33 Million in August 2009

to 37.31 Million at the end of September 09.

This decline is mainly on account of reduction in the wire line

subscriber base of BSNL/MTNL, which lost 0.06 Million subscribers in

the month of September 09. These two PSU operators hold 85.67%

of the Wire line market share. Overall Wire line teledensity is 3.19

Total Broadband subscriber base has increased from 6.98 million in

August 09 to 7.22 million in September 09 thereby showing a growth

of 3.29%.

E-mail is now one of the most frequently used types of

telecommunication. Facsimile (fax) equipment transmits a digitized

exact image of a document over telephone lines. At the receiving

end, the fax machine converts the digitized data back into its

original form.

3.6 CURRENT STRUCTURE OF THE INDIAN TELECOM INDUSTRY:

At present, both public sector players as well as the private sector

players are dynamically catering to the rapidly growing

telecommunication needs in India. Private participation is permitted

in all segments of the telecom industry, including ILD, DLD, basic

cellular, internet, radio paging, et al. The broad structure of the

telecom industry (in terms of service providers) is represented in the

diagram below:

Chart 3.1

PUBLIC SECTOR:

After the privatization of VSNL in 2002, only two leader PSUs, MTNL

and BSNL operate in India and provide various telecom services. As

noted earlier, MTNL operates in Delhi and Mumbai and BSNL

provides services to the remaining country. In the post-liberalisation

era, these PSUs not only have made significant progress but also

have provided stiff competition to their private counterparts.

PRIVATE SECTOR:

Private operators have played a very vital role in the growth of the

telecommunication industry, primarily in the mobile services. With

the liberalization of the telecom industry, the private sector has been

increasing its foothold in the telecom services space. After the

introduction of NTP-99, the contribution of private players towards

telecom services has witnessed rapid pace. While the private sector

is instrumental in providing both fixed line as well as wireless

services, it is mainly active in the wireless segment. The fixed lines

account for only about 2% of private sector's total subscriber base.

While some private players have a pan-India being there, there are

many regional players that cater to only certain service areas.

CHANGE IN MARKET SHARE:

The subscriber base of the public as well as private players has

grown rapidly post-liberalisation. The subscriber base of telecom

industry grew from around 18.68 mn during FY98 to 429.72 mn

during FY09 and a important proportion of this growth has emanated

from the private sector. The private players registered a complete

growth of around 339.30 mn in subscriber base during FY98-FY09.

This could be largely attributed to rapid growth in mobile subscriber

base of the private players. With the gradual opening up of the

telecom industry, the private players have been able to garner

strength and improve their hold on the telecom service provision.

Further, the introduction of the New Telecom Policy (NTP-99), which

enabled migration in the license fee payment mechanism from a

fixed regime to a revenue-sharing regime, provided a major boost to

private sector players. Moreover, initiatives such as allotting third

and fourth cellular licenses, shifting to a unified access licensing

regime, execution of calling party pays (CPP) regime, making

incoming calls free, also drew significant growth in the cellular

subscriber base.

Graph 3.1

Although the subscriber base of public entities has also expanded, it

has grown at a much lower rate as compared with private players.

During 1998-2008, the subscriber base of PSU operators grew by

merely 71.72 mn. The public sector has witnessed continuous

depletion in its share in the total subscriber base over the years, as

it has been on a comparatively lower growth trajectory.

The share of private sector in the total subscriber base has increased

substantially from 4.7% in FY98 to 79.2% in FY09. Even though these

figures indicate the dominance of the private sector in terms of

subscriber base, it is important to note that the prominence of

private and public sector service providers varies in different

segments of the telecommunication industry.

SEGMENTS IN THE TELECOMMUNICATION INDUSTRY:

Telecommunication services in India can be divided into two broad

segments, wireline services and wireless services. While the wireline

services comprise the fixed line telephony, wireless services

comprise mobile, WLL (F) and WLL (M). On the entire, the Indian

telecom industry has made noteworthy progress; however, the

source of emergence of this growth in terms of wireless and wireline

segments has undergone substantial change in the past few years.

Graph 3.2

Market Share FY98 (%) Market Share FY09

(%)

The wireline segment, which accounted for a major share of the

telecom industry during commencement of the current decade, has

witnessed a decline in its subscriber base in the last 2 years. The

subscribe base of the wireline segment, which reached a peak of

41.54 mn during FY06, has witnessed a declining trend since then.

The subscriber base of the wireline segment has declined to 37.96

mn in FY09 from its peak in FY06. On the other hand, the growth in

subscriber base of the wireless segment has enlarged substantially

over these years. The subscriber base of the wireless segment has

increased from around 6.70 mn in FY02 to as much as 391.76 mn in

FY09. Over these years, not only the number of wireless subscribers

but also the pace of its growth has increased substantially.

Graph 3.3

Wire line and wireless subscriber Base

Other telecommunication services such as internet services,

broadband services, VSAT, also have developed gradually and have

become an integral part of the Indian telecom industry. Thus,

broadly the Indian telecommunication industry can be classified into

the following segments:

Wireline services

Wireless service: GSM and CDMA

Internet services

Public Mobile Radio Trunked Services

Global Mobile Personal Communication by Satellite (GMPCS)

Very Small Aperture Terminals (VSAT)

Mobile Value Added Services

WIRELINE SERVICES

The wireline segment includes basic wireline services rendered to

households, commercial units and to service supplier such as public

call offices. While the incumbent PSUs have been the dominant

players in wireline service, some private players have been gradually

making their presence felt in this segment. As on March 31, 2008, 5

licensed private operator groups were providing wireline connections

in addition to the incumbent BSNL and MTNL.

Chart 3.2

Market Share in Terms of Subscriber Base

BSNL and MTNL have been group of actors in the wireline service.

still private players have been allowed to participate in fixed services

since 1994, they only have around 13% contributions in the fixed

line subscriber base (as on March 31, 2009). Though private players

like Bharti and Reliance have registered outstanding growth, the

Government-owned BSNL dominates the segment in terms of

subscriber base. The public sector companies enjoy a first-mover

advantage in this segment and this is likely to have helped them

seize a substantial share in the wireline market and maintain their

dominance in this segment. The public sector accounts for almost

87% of the subscriber stand of the fixed line services (as on March

31, 2009); however, over the years, the share of private sector has

witnessed some enhancement.

Graph 3.4

Market share in Terms of subscriber Base (FY09) (%)

Wireless Services

Wireless services can be further divided into Global System for

Mobile Communications (GSM) and Code Division Multiple Access

(CDMA). The WLL (F) is operated under the CDMA know-how. The

GSM services, which account for 73% of the total subscriber base of

the wireless service, dominate the wireless segment.

Wireless Subscriber Market Share: Service Wise (GSM &

CDMA)

The wireless services have witnessed important growth in the past

few years. India primarily follows the GSM mobile system, in the 900

MHz and 1800 MHz band. The 900 MHz band has greater

transmission characteristics, so enabling lower capital expenditure

for development of coverage area as the number of towers and base

stations required are lesser as compared to the 1800 MHz band.

The wireless services segment of the telecom industry clocked an

annual average growth of around 63.79% during FY05- FY09. India

has overtaken the USA to become the second-major wireless

network in the world, and is second only to China, with the addition

of about 8 million subscribers every month in the recent times. By

end of FY09, the wireless industry had touched the 391.76-mn-

subscriber-mark. This total subscriber base of FY09 comprise of

297.26 mn GSM subscribers and 94.50 mn CDMA subscribers. During

FY09, around 130.69 mn subscribers were added in the wireless

segment of the telecommunication industry.

Graph 3.5

Source : TRAI

Private sector players have played an important role in the fast growth of the

wireless segment. The private players account for around 86% of the total

wireless subscriber base. While public sector has been instrumental in the

development of the wireline service, the growth in wireless subscriber base for

these entities has been relatively slower compared to the private players.

Currently 12 wireless service providers (including 2 PSUs) exist and compete in

different regions. However, only 2 private players, Bharti and Reliance

Communications, have nationwide presence along with state-owned entities,

MTNL and BSNL, which together represent an additional pan-India presence.

Many players have been taking initiatives to expand operations across the

country. The GSM sector is dominated by players such as Airtel, Vodafone-Essar,

and Idea Cellular, while the CDMA sector is dominated by Reliance and Tata

Indicom. Bharti Airtel is the largest GSM mobile operator in India and has a

subscriber base of 93.92 million followed by Vodafone-Essar, BSNL and Idea

Cellular with a subscriber base of 68.77 mn, 46.71 mn and 38.89 mn, respectively.

Reliance Communication is the largest CDMA mobile operator with a subscriber

base of 52.65 mn followed by Tata Teleservices and BSNL that have a subscriber

base of 35.12 million and 5.44 million, respectively. Only Reliance

Communication and Tata Teleservices offer both GSM and CDMA networks.

Graph 3.6

Market share in GSM segment FY09 (%) Market share in CDMA segment FY09 (%)

Source : TRAI

Internet Services

Internet services in India have witnessed considerable growth in the

last few years owing to increased presence of the private players

and emergence of new technologies. A noteworthy improvement has

also been seen in the quality of internet services given the

substantial upgradation of telecom infrastructure. The subscriber

base of internet services reached 13.50 mn on March 31, 2009 as

compared with 0.09 mn in 1997. During the last 5 years (FY05-FY09),

the subscriber base of internet services registered an average

annual growth of 24.46%, primarily driven by the rapid growth in

subscriber base of the public sector players.

Graph 3.7

Growth in Internet Subscriber Base

The public sector players dominate the internet market accounting

for almost 69.30% of the total internet subscriber base. Among the

public sector players, BSNL rules the internet provision market with a

market share of around 53.61% followed by MTNL that accounted for

15.69% as at end March 31, 2009. Among the private players, Bharti

Airtel Ltd has the highest internet subscriber base of 1.08 mn

followed by Reliance Communications Infrastructure Ltd, which has a

subscriber stand of 0.93 mn.

In calculation to the internet subscribers, around 117.82 mn wireless

data subscribers also access the internet through wireless (GSM and

CDMA) networks; in fact, broadband connections also have

witnessed significant growth in the past few years. According to the

Broadband Policy 2004, the broadband connection is an ‘always-on’

internet access with a minimum speed of 256 Kbps from the Internet

Service Provider’s (ISP) Node to the customer premises equipment

(CPE). The broadband subscriber base has surged to around 6.20 mn

by end March 09 as against 0.18 mn at end March 05, registering a

CAGR of around 142% throughout this era.

Graph 3.8

Broadband subscriber

As at end March 2009, there were approximately 95 broadband

service providers. However, around 96.95% of the total broadband

subscriber base was accounted for by the top 10 players. In fact

BSNL alone accounts for almost 57.24% of the total broadband

subscriber base.

Graph 3.9

Market share in broadband segment FY09 (%)

Internet telephony

Internet telephony is increasing at a steady velocity in India.

According to the accessible licensing policy, PC-to-PC internet

telephony calls are allowed without any restriction. A PC or adapter

can be used to call Public Switched Telephone Network (PSTN) /

Public Land Mobile Network (PLMN) abroad; however, Internet

telephony calls from such devices to PSTN/PLMN in India are not

permitted. The Internet telephony has been permitted to all ISPs

with effect from August 24, 2007. A total of 34 ISPs provided Internet

telephony services in India (as on the quarter-ended March 31,

2009).

Graph 3.10

Share in subscriber base of PMRTS FY09 (%)

*Others include-Jet-Aiu Skyline Transport Pvt. Ltd., India Satcom Ltd.,

Container Movement (Bombay) Transport Pvt Ltd. Source: TRAI

Global Mobile Personal Communication by Satellite (GMPCS)

GMPCS services allow a subscriber to communicate from any point

on earth through a handheld fatal. Under these services, the

telephone numbers of users remain unchanged, irrespective of their

location. GMPCS services have been operational in India since 1999.

As on date, there is no license for providing GMPCS service in India.

Very Small Aperture Terminals (VSAT)

VSAT is a communication system in which the radio signals are

received and transmitted through a satellite. VSAT has a less than 3

meter tall dish antenna that relays data to the satellites in the

geosynchronous orbit, which then relays data from terminals on

earth to other terminals and hubs located in various parts of the

world. It is an economical and viable option to connect different

geographical locations. It provides connectivity to the points where

regular systems or wired lines fail to reach and last mile connectivity

is difficult to achieve. VSATs are frequently used for various types of

communications as well as to transfer broadband data such as VoIP,

satellite Internet and video or narrowband data such as polling,

SCADA (Supervisory Control and Data Acquisition), credit cards

transactions and RFID (Radio Frequency Identification). In India the

VSAT services market is growing rapidly. Now, 9 VSAT service

providers are offering VSAT services in India.

Mobile Value added Services (MVAS)

Over the last few years, Mobile VAS has gained significance as it has

been emerging as a potential substitute revenue stream. VAS

enables the subscriber to use the mobile phone for a host of

purposes such as for sending short messages, pictures, to surf the

Internet, for mobile banking including mobile payments, to read

news headlines, astrology, to listen to music, to play games and to

seek various other types of information. Stipulation of VAS is either

directly done by the telecom operators or by a third party VAS

Provider (VASP). Services such as SMS, GPRS are provided directly

by the telecom operators and others such as astrology, ring back

tunes are provided by the VASPs. In most cases, the contents used

for providing VAS are sourced from content providers/content

developers or copyright owners known as content owners. Bulk of

VAS services currently being provided by the mobile operators in

India are in the form of SMS, ringtone and caller ring back tones

(CRBT).

3.7 CONTRIBUTION OF VARIOUS TELECOMMUNICATION

INDUSTRY IN ECONOMIC DEVELOPMENT:

Telecommunication has been documented world-over as an

important tool for socio-economic development for a nation and

plays a phenomenal role in growth and modernization of various

sectors of the economy. Over the last few years, Indian telecom

market has shown overwhelming growth thanks to domestic

demand, policy initiatives undertaken by the government and

marvelous efforts by the players of the industry and in the process,

has managed to emerge as one of the youngest and fastest growing

economies in the world today. Factors like regulatory liberalization,

structural reforms and competition played a very significant part in

this rapid transformation.

The fact that India is one of worlds fastest growing telecom markets

in the world, has acted as the primary driver for foreign and

domestic telecommunication companies investing into the sector. It

is also recognized as one of the most lucrative markets globally,

consequential in massive investments being made in the sector both

by the private and government sector in the last decade.

The telecom industry has witnessed significant growth in subscriber

base over the last decade, with growing network coverage and a

competition-induced decline in tariffs acting as catalysts for the

growth in subscriber base. The growth story and the potential have

also served to attract newer players in the industry, with the result

that the intensity of competition has reserved increasing.

Liberalization of the sector has not only led to fast growth but also

helped a huge deal towards maximization of consumer benefits,

evident from a huge fall in tariffs. Telecom sector has witnessed a

continuous rising trend in the total number of telephone subscribers.

From a meagre 22.8 million telephone subscribers (wireless plus

wire line) in 1999, it has grown to 926.53 million at the end of

December, 2011, reaching teledensity of 76.86 %. The total number

of urban subscribers today stand at 611.19 Million (65.59 %) and

rural subscribers at 315.33 Million (34.41 %). Wireless telephone

connections have contributed to this growth as the number of

wireless connections rose from 35.61 million in 2004 to 893.84

Million at the end of December, 2011.

Also, broadband division has seen significant growth with total

internet subscribers reaching 20.99 million in September, 2011,

which includes 13.30 broadband subscribers.

The industry has handled newer heights with the rollout of newer

circles by operators, successful auction of third-generation (3G) and

broadband wireless access (BWA) spectrum, network rollout in semi-

rural areas and increased focus on the value added services (VAS)

market. Meanwhile, the introduction of Mobile Number Portability

(MNP) in India has made the Indian Telecom market more

competitive, in terms of service offerings and quality with lesser

voice tariffs and low ARPUs in India, emergence of new technologies

and advancements towards 3G amongst others reasons are

motivating operators to shift their focus on VAS. Particularly, past

few years have been quite revolutionary for the industry as it

witnessed the emergence of smartphones; GPS enabled sets, and 3G

handsets. Initiatives to connect the rural masses are already visible

with service providers tie ups with content providers for services

related to agriculture, weather and livelihood.

The appearance of the mobile has benefitted people across all walks

of life. Going forward, it is expected to play a significant role in

bridging the digital divide between the rich and poor, between near

and far, thus in connecting the nation. It has not only become the

primary communication medium for people, but is also finding

numerous uses across various domains. Today, it is being used for

banking transactions, making payments, acting as an educational

and multimedia tool, etc. However, the urgent need is to deliver

services that could enable efficient day- to- day life for the larger

masses efficiently. It can be an efficient mode of spreading

governance, and can also be used across verticals such as

agriculture and healthcare. The rapid rise of high-end mobile phones

(smartphones) has enabled the customers to access and utilize

numerous software applications as utility or for entertainment.

The fast pace of growth in telecommunications makes it necessary

to develop India as a Global manufacturing hub. With its proven

track record in the skill-intensive industries and the global trend to

manufacture and source products in low cost countries, India is well

placed to emerge as one of the leading hub for manufactured

exports.

With the liberalization of the Indian economy, the telecom sector has

become very attractive for mergers and acquisitions. M&A in India is

subject to various laws the principle of them being The Companies

Act 1956, Income Tax Act 1961 and the Takeover Code (for public

listed companies). Regulatory considerations are also evenly

important to take note of in telecom M&A.

Financial Assistance

The Indian Telecom industry contributes 3 % in the GDP (2010).

Foreign direct investment has been one of the major contributors in

the development of the Indian economy, and therefore, the need for

higher FDI is felt across sectors in the Indian financial system. The

telecom sector has played a crucial role in attracting FDI in India.

India's telecom sector received US$ 1093 million in foreign direct

investment (FDI) during the first quarter (April-November) of

financial year 2010-2011. Today, telecom is the third major sector

attracting FDI inflows after services and computer software sector. In

the telecom sector, FDI up to 49% is allowed under automatic route

and beyond that up to 74% is permitted through the Foreign

Investment Promotion Board (FIPB), a government body. As per the

current telecom services policy, the sector has 74% of equity on

basic cellular, unified access services and other value-added

services.

An attractive trade and investment policy and profitable incentives

for foreign collaborations have made India one of the world’s most

attractive markets for the telecom equipment suppliers and service

providers. Few such constructive policies are:

No industrial license is required for setting up manufacturing

units for telecom equipment.

100% Foreign Direct Investment (FDI) is allowed through

automatic route for manufacturing of telecom equipments.

Payments for royalty, lump sum fee for transfer of technology

and payments for use of trademark/brand name on the

automatic route.

Foreign equity of 74% (49 % under automatic route) is

permitted for telecom services - basic, cellular mobile, paging,

value added services, NLD, ILD, ISPs - and global mobile

personal communications by satellite.

Full reparability of dividend income and capital invested in the

telecom sector

Research & Development

India has established its dominance as a technology solution

provider. Efforts are being continuously made to develop affordable

technology for masses, as also comprehensive security

infrastructure for telecom network. Research is on for the

preparation of tested infrastructure for enabling interoperability in

Next Generation Network. Pilot projects on the existing and

emerging technologies have been undertaken including WiMax, 3G

etc. Emphasis is being given to technologies having potential to

improve rural connectivity. Also to beef up R&D infrastructure in the

telecom sector and bridge the digital divide, cellular operators, top

academic institutes and the Government of India together set up the

Telecom Centres of Excellence (COEs)

Seven Centres of Excellences in various field of Telecom have been

set up with the support of Government and the participation of

private/public telecom operators as sponsors, at the selected

academic institutions of India.

The proposed benefits from the R&D initiatives by the Government

are:

Pre-eminence of India as a technology solution provider.

Comprehensive security infrastructure for telecom network.

Tested infrastructure for enabling interoperability in Next

Generation Network.

To support Research & development in the country and promoting

Start ups focused on technology and modernization, a weighted

deduction of 150% of expenditure incurred on in-house R&D is

introduced under the Income Tax Ac. In addition to the existing

scheme for funding various R&D projects have been funded through

new scheme like Support International Patent Protection in

Electronics & IT (SIP-EIT), Multiplier Grants Scheme (MGS).

The government has initiated the setting up of an Open Technology

Center through NIC aimed at giving successful direction to the

country on Open Technology in the areas of Open Source Solutions,

(OSS), Open Standard, Open Processes, Open Hardware

specifications and Open Course-ware. This initiative will act as a

National Knowledge facility providing synergy to the overall

components of Open Technology globally.

REGULATIONS :

1. The Indian Telegraph Act, 1885

This Act is one of the oldest legislations still in consequence in India

and is an Act to amend the law relating to telegraphs10 in India.

2. The Indian Wireless Telegraphy Act, 1933

This Act was passed to regulate the possession of wireless

telegraphy apparatus11. According to this Act, the possession of

wireless telegraphy apparatus by any person can only be allowed in

accordance with a license issued by the telecom authority. Further,

the Act also levies penalties if any wireless telegraphy apparatus is

held without a valid license.

3. The Telecom Regulatory Authority of India Act, 1997

The Telecom Regulatory Authority of India Act, 1997 allowed the

establishment of the TRAI. The role and functions of the TRAI have

already been discussed in Chapter III above. Interestingly, the 1997

Act empowered the TRAI with quasi-judicial authority to adjudicate

upon and settle telecom disputes. Later this Act was amended by

the Telecom Regulatory Authority of India (Amendment) Act, 2000 to

bring in better clarity and distinction between the regulatory and

recommendatory functions of TRAI.

4. The Information Technology Act, 2000

In 2000, the Indian Parliament approved the Information Technology

Act, 2000 (“ITA”) mainly to promote e-commerce and give legal

recognition to electronic documents and digital signatures as means

to authenticate electronic documents. Later, the Information

Technology (Amendment) Act, 2008 (“ITAA 2008”) was passed

which provided additional focus on information security as well as

added several new sections on offences including cyber terrorism

and data protection.

5. Communication Convergence Bill

In the year 2000, the Government of India introduced a projected

Communication Convergence Bill (the “Convergence Bill”). As its

name indicates, the objective of the Convergence Bill is to establish

a new “converged” regulatory framework to promote and develop

the communications sector (including broadcasting,

telecommunications and “multimedia”) in an environment of

increasing convergence of technologies, services and service

providers.

6. National Telecom Policies:

Driven by various policy proposal from NTP’94 and NTP’99, the

Indian telecom sector witnessed a complete transformation in the

last decade.

But, since then there has been a rapid advancement of technology,

and many changes have arisen in the telecom scenario in the world,

thus, creating a need for reviewing the current telecom policy.

National Telecom Policy 2012 is expected to ensure that India’s

growth doesn’t slow down and it plays a leadership role effectively.

Challenges:

Even though the Indian telecommunications sector has come a long

way since the time of liberalization and promises growth, there are a

number of issues which still create a challenge to its progress. Two

critical issues are:

(i) Declining Average Revenue per User (“ARPU”): The Indian

telecommunications sector is a highly competitive sector. A

sustained price war in the industry has resulted in declining ARPUs.

As a result, operators are focusing more on data and value added

services to meet the revenue deficit caused by fall in revenue by

their core business.

(ii) Lack of Telecom Infrastructure: Operators have to incur huge

capital costs to provide telecommunications services in the rural

areas of India. Added to this cost is the logistical challenge posed by

the lack of supporting infrastructure such as lack of roads and

electricity.

With new players coming in, the intensity of competition in the

industry has increased, especially over the last four years. The

market share of the telecom companies reflects the fragmented

nature of the industry, with as many as 15 players.

Future prospects:

Seeing that the fastest growing telecommunications market in the

world, India is projected to have 1 billion telephones by 2015 and is

estimated to become world's largest mobile phone market by

subscriptions by 2013. With a large population yet to have access to

telecommunication and teledensity still being 76.86 % and rural tele-

density at 37.48 %, there is significant growth opportunity for the

sector, especially in rural areas and 3G and BWA yet to make major

inroads.

India offers an unparalleled 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 sector:

An expanding Indian economy with increased focus on the

services sector

Population mix moving favorably 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.

An attractive trade and investment policy and worthwhile incentives

for foreign collaborations have made India one of the world’s most

attractive markets for the telecom equipment suppliers and service

providers.

Key factors, which will fuel the growth of the sector include

increased access to services owing to launch of newer telecom

technologies like 3G and BWA, better devices, changing consumer

behaviour and the emergence of cloud technologies. Majority of the

investments will go into the capital expenditure for setting up newer

networks like 3G and developing the backhaul. Moreover, the

introduction of Mobile Number Portability (MNP) in India has made

the Indian Telecom market more competitive, in terms of service

offerings and quality.

ROLE OF COMPONENTS IN TELLECOMMUNICATION IN

INDUSTRIES:

The telecommunications sector was selected by the Trade

Committee as one of the sectors, along with business services and

creation, to be covered in pilot studies aimed at examining the

effects of regulations on trade flows. Telecommunications is distinct

among services owing to its crucial role in driving economic growth

and its rapidly changing technological and regulatory environment.

This sector is also unique in that demand for this service is

derivative demand and that most of the trade in this sector is not

recorded. Therefore, trade-related data analysis and conclusions are

generally confined to the small segment consisting of fixed-line calls,

for which reasonably good data are available. The

telecommunications industry is a regulated industry owing to its

network characteristics. Different regulations may have different

impacts on trade flows and an aim of this report is to identify the

ones that may affect trade. Such regulations will be examined from

the point of view of their impact on trade; however, they can in

principle be put in the GATS context at a later stage. The economics

of telecommunications regulation is a science on its own. Here only

those regulations will be mentioned that either directly relate to

international trade, investment or foreign affiliates or are perceived

to have a bearing on trade flows.

Selected features of the telecommunications sector

Telecommunications services is a broad sector surrounding the

transmission of sound, images, or other information by such

channels as telephone, telex, telegram, cable, broadcasting,

satellite, electronic mail, or duplicate services and including business

network services, teleconferencing, and support services.1 The

definition of the category may differ somewhat by country; in the

United States, for instance, internet providers do not belong to

telecommunications but rather to information services.

The importance of the telecommunications sector for the market is

not only reflected in its sheer size of about 3% of GDP in 2005, but

even more by its involvement to overall productivity growth, hence

to the growth of the economy. Given the telecommunication sector’s

prominent role as a driver of economic growth, it is crucial to create

an economic policy environment that stimulates productivity growth

in this sector.

Telecommunications services as critical inputs to production

and delivery of goods and other services

The telecommunications sector is described by continuous

technological innovation spurring productivity growth in the sector.

Given the sector‟s critical role in producing inputs to the production

and delivery of goods and other services, innovation and

productivity growth in telecommunications are decisive for the whole

economy. Total factor productivity (TFP) estimates using firm-level

data in the Amadeus database show that the telecommunications

sector has been the fastest growing in Spain (Figure 1). Correa

(2006) shows that the telecommunications sector registered above-

average productivity growth over the past 34 years in the UK and

confirms that other industries have greatly benefited from rapid

productivity growth in this sector. This may have emanated from the

policy of encouraging infrastructure investment in their production

processes.

Graph 3.11

Figure 13. Telecommunications leads productivity growth in services in India Average annual compound growth rate of TFP,

Note: Total factor productivity was estimated using firm-level data from the Amadeus database. Source: Author’s estimation. 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 0.45%

The contribution of telecommunications to the growth performance of India’s

economy

Communications is the fastest growing sector within India’s financial

system. The average composite rate of growth of the sector works

out to 24.02 per cent per annum since the turn of this millennium

(See Table 2). No other sector of the economy has clocked such a

high rate of growth. The sector accounts for about 4 per cent of GDP

and therefore with this rather high rate of growth contributes about

11 per cent of the growth in overall GDP of the country. Of the

Information and Communications Technology (ICT) sector of the

economy, it is again the communications sector that is more

important. This is evident from a dataset on ICT spending developed

by World Information Technology and Services Alliance (2006), of

the total spending on ICT by India, about 63 per cent was in

communications (See Graph 3.12).

Graph 3.12

Distribution of total ICT spending in India, 2001-2006

NOTE: World Information Technology and Services Alliance (WITSA) (2006)

Table 3.1: Relative share of the service sector in India’s economy,

1990-91 and 2006-07 (per cent)

Table 3.1

  Real GDP Exports FDI

1990-91 40.6 20 Not Available

2006-07 61.8 39 81

Source: Computed from Reserve Bank of India (RBI) (2007) 

Table 3.2: Contribution of the communication sector to India’s

growth performance 1999-2000 to 2005-06 (1997-2003)

  Shar

e

Growth rate of

communication

sector

Overall

rate of

growth

of GDP

Contribution

(%)

1999-2000 1.6      

2000-2001 1.9 26.9 41 12.47

2001-2002 2.2 19.5 56 7.66

2002-2003 2.6 25.6 34 19.58

2003-2004 3.1 25.4 86 9.16

2004-2005 3.5 22.8 75 10.64

2005-2006 4 23.9 91 10.51

Source: Central Statistical Organization (2007)

Graph 3.13

Graph 3.13: Relative shares of the equipment and service sectors in the total

telecom equipment sector, 1992-93 to 2005-2006

Source: Department of Telecommunications (DoT) (2007) and World Markets

Research Centre (2005)

Table 3.3: Trends in the number of telecom subscribers and in tele

density, 1991-2007 (Numbers in millions; Tele density is number of

telephones per 100 people)

Column Fixe G. Mobil G. Total G. Tele Ratio

s d Rate e Rate RateDensit

y

of mobile to

Fixed

1991 5.07       5.07   0.6  

1992 5.81 14.60     5.8114.60

0.67  

1993 6.8 17.04     6.817.04

0.77  

1994 8.03 18.09     8.0318.09

0.89  

1995 9.8 22.04     9.822.04

1.07  

1996 11.98 22.24     11.9822.24

1.26  

1997 14.58 21.37 0.34   14.8824.21

1.56 0.02

1998 17.8 22.42 0.88158.82

18.6825.54

1.94 0.05

1999 21.59 21.29 1.2 36.36 22.7922.00

2.33 0.06

2000 26.51 22.79 1.88 56.67 28.3924.57

2.86 0.07

2001 32.44 22.37 3.58 90.43 36.0226.88

3.58 0.11

2002 41.84 27.87 13263.13

54.4851.25

4.3 0.31

2003 42.58 2.65 33.58158.31

76.1639.79

5.1 0.79

2004 45 5.68 50 48.90 9524.74

7.04 1.11

2005 49 8.89 76 52.00 12531.58

10.66 1.55

2006 40.43 -17.49 149.5 96.71198.93

51.94

17.16 3.70

2007 39.25 -2.92233.63

56.27272.28

  25 5.28

2008 * 38.92  277.92

 325.78

  28.33 7.14

*as on June 30 2008

Source: Department of Telecommunications (DoT) (2005) and

Telecommunications Regulatory Authority of India (TRAI) (various issues)

Table 3.4: Monthly additions to mobile subscribers, 2002-08 (in

million numbers)

Column 2002

2003

2004

2005

2006

20072008

January   0.64 1.58 1.76 4.69 6.81 8.77

February   0.6 1.6 1.67 4.27 6.22 8.53

March   0.96 1.93 0.78 5.03 3.53 10.1

April 0.28 0.64 1.37 1.46 3.88 6.11 8.21

May 0.29 2.26 1.33 1.72 4.25 6.57 8.62

June 0.35 1.42 1.43 1.97 4.78 7.34 8.81

July 0.36 2.32 1.74 2.46 5.39 8.06  

August 0.49 1.79 1.67 2.74 5.9 8.31  

September

0.37 1.61 1.84 2.48 6.07 7.8  

October 0.53 1.67 4.51 2.9 6.71 8.05  

November 0.72 1.9 1.56 3.51 6.8 8.32  

December 0.8 1.69 1.95 4.46 6.4 8.17  

Average0.46 1.46 1.63 2.33 5.35

7.1075

 

Source: Telecom Regulatory Authority of India (TRAI) (various issues)

Interpretation:

Contribute to the private sector in the on the whole telecoms

industry has been rising (Figure 3) and the ratio of private to public

essentially crossed unity in 2006. This again is due to the fact that

the public sector is more leading in wireline (or fixed) and the private

sector is dominant in the wireless (mobile) segment (Graph

3.14)

Graph 3.14

Graph 3.14: Rising privatisation of the telecommunications services sector,

1995-2006

Source: Department of Telecommunication (DoT) (2007)

Table 3.5: Structure of the telecommunications services industry according to ownership (Percentage shares as on May 31 2007)

  Wireline Wireless

Public 91 19.32

Private 9 80.68

Total 100 100

Source: Telecom Regulatory Authority of India (TRAI) (2007 a)

FUTURE GROWTH OPPORTUNITIES OF INDIAN TELECOM

SECTOR:

As per TRAI, two other related aspects for market growth are

availability of spectrum and availability of resources for network

rollout and development. The government is currently looking into

these two areas. The 79% hike in FDI has been cleared by the

government to ensure continuous flow of investments to expand the

reach of the mobile operators. To realize full market potential and

achieve the forecasts, telecom operators have to work on a

segmented approach and focus on the five key strategies given

below:

Mobile in the hand of every urban youth (age group 15 to 24

years).

Mobile in the hand of every executive /businessman/skilled

worker.

Mobile in every household with income above Rs. 4000.

Mobile penetration in every town/village, with a population of

over 3,000.

Mobile Phones affordable and available wherever mobile

services available.

CHAPTER-4

MARKETING STRATEGIES OF DIFFERENT TELECOM

COMPANIES

4. 1 Introduction :

An interesting feature of every industry in the current scenario is

high volatile competitive environment. The market for mobile service

segment are much more then the fixed line service. Private

operators hold 88.43% of the wireless market share (based on

subscriber base) where as BSNL and MTNL, the two PSU operators

hold only 11.57% market share. The graphical presentations of

market shares and shares in net additions of all the service providers

during the month of September, 2012 are given below:

Graph 4.1

Service Provider wise Market Share as on 30th September,

2012.

Graph 4.2

Service Provider wise growth in subscriber base

(August-September 2012).

Graph 4.3

Overall Teledensity (Circle Wise)

4.2 Overall Teledensity (Circle Wise)

1. Population data/Projections are available state wise only.

2. Teledensity figures are derived from the subscriber data provided

by the operators and the population projections published by the

Office of the Registrar General & Census Commissioner, India.

3. Delhi Service area, apart from the State of Delhi, includes wireless

subscribers of the areas served by the local exchanges of Ghaziabad

& Noida (in UP) and Gurgaon & Faridabad (in Haryana). West Bengal

service area includes Kolkata, Maharashtra includes Mumbai and

Tamil Nadu includes Chennai

Table 4.1

Market share of Various Telecom Service Provider

Mobile phone companies Bharti Airtel and Idea Cellular have

increased their market share in terms of revenue in the three

months to December, a sign that their strategy of focusing on data

and cutting discounts has begun to pay off.

In contrast, RCOM and Aircel, which had been gaining market share

since the first quarter, have lost pace, according to data provided by

the Telecom Regulatory Authority of India (Trai). Telenor's Indian

unit, Uninor, also lost market share (revenue) as it closed operations

in a few circles.

"Incumbents' strategy of improving revenue market share seems to

be paying off as they focus on revenue from data and weeding out

subscribers that do not bring revenue," said an analyst from a

Mumbai-based consulting firm. "Operators have started to focus on

profitability, which can be clearly seen in case of new operators who

have shut operations in some circles to make business viable."

Telecom operators have also increased tariffs and cut down on

freebies and discounts to increase profitability. Bharti, the country's

top mobile phone operator, recorded its largest increase in revenue

share since the beginning of this financial year, accounting for 30.4%

share of the industry's sales for the December quarter, up from

29.9% in the previous quarter. Brokerage houses and analysts said

Bharti's revenue market share had to be adjusted for the one-time

gain in revenues in the second quarter from an outstanding dispute

in TDSAT related to inter-connect charges, due to which the

revenues were slightly inflated. Therefore, the company's actual

revenue market share in the September quarter had declined by 28

basis points from 30.1% in the quarter ended June, and its share in

the December quarter improved on an organic basis. Following

telecom tribunal TDSAT's favorable order, Bharti

recognised revenues of Rs 586 crore in the September quarter.

Bharti's regional markets showed massive improvement as revenue

share in Tamil Nadu, Rajasthan, UP East and Bihar rose by more than

1.5% on average. While Karnataka grew by 0.7%, Andhra Pradesh

saw a loss of 1.1% revenue share in the third quarter, IIFL Research

said.

Idea Cellular, too, gained more than 20 basis points in three months

to December, strengthening its revenue market share to 14.8% after

two quarters of slide. The company regained lost ground in

Maharashtra, where it is the market leader, with a 65 basis points

rise in revenue share while in Kerala and Madhya Pradesh its share

grew by 97 and 96 basis points, respectively.

For Vodafone, the country's second-largest mobile phone company

by subscribers, revenue market share remained stable for the third

straight quarter at 22.5%.

A company spokesperson, however, said its share had grown to

21.3% on the back of growth in voice from new circles of Assam, the

Northeast, Bihar, Himachal Pradesh, J&K, Madhya Pradesh and

Chhattisgarh, which were acquired in 2008-09, besides rise in overall

data revenues.

"More than 33.1 million mobile internet users contribute roughly

6.2% of the total revenues as of Q3. The number of internet users

has doubled over the last two to three years, while the overall

quality of customers has improved, which is evident in our VLR

numbers," he said.

The revenue market share of Anil Ambani-promoted RCOM, the third

largest operator, dipped to 7.9% in the December quarter, down

from 8.1% in the second quarter when the growth had been more

than 40 basis points.

Madhya Pradesh telecom circle includes Madhya Pradesh and

Chhattisgarh states higher proportion of active users coupled with

healthy growth. The below stated are the key features representing

the status of the telecom market in Madhya Pradesh:

Mobile subscriber base of Madhya Pradesh (M.P.) increased by

12.65% during FY2012 to reach 52.62 million

Active wireless subscriber base in M.P. is 81.48% resulting in

42.06 million active mobile users. M.P. has one of most active

mobile users by proportion in India

Active subscriber base in M.P. increased by 23.30% during

FY2012 compared with national average of 19.00%

By March 2012, M.P. is 6th largest wireless telecom market in

India accounting for 6.16% of total active subscriber base,

climbed up from 8th position during FY2011

By March 2012, M.P. registered 2,501,550 Mobile Number

Portability (MNP) requests, resulting into churn rate of 4.85%

In M.P. wireless telecom market, Idea leads with 26.6% share

in terms of total subscriber base followed by Reliance (23.7%),

Bharti (18.7%), Tata (9.4%) and BSNL (9.3%)

Idea extends market share in terms of active subscriber base

as 101.5% of its mobile subscribers are active compared with

74.6% for Reliance and 91.6% for Bharti

In terms of active subscriber base, Idea has 33.2% market

share followed by Reliance (21.7%) and Airtel (21.1% 

Bharti Airtel maintains its leadership position with 24.9% market

share in India.Idea has largest proportion of active mobile users

at 97.19% followed by Vodafone (95.71%) and Bharti Airtel

(95.26%) State-owned BSNL+MTNL with only 56.08% of active

mobile subscriber base is certainly struggling in highly

competitive and dynamic market environment raising lot of

concerns about their future While Tata (68.14%), Aircel (64.14%)

and Unitech (70.22%) are way behind leading pack in terms of

active user proportion raising doubts about long term

sustainability of their business model During September 2013,

Reliance took drastic step by disconnecting 10.49 million of its

inactive connections. As a result, active subscriber percentage of

Reliance improved from 86.68% in August 2013 to 93.71% in

September 2013 Due to its large scale disconnections, Reliance

dropped to 4th position behind Airtel, Vodafone and Idea in terms

of total wireless subscriber base Idea (1.21 million), Vodafone

(1.20 million) and Bharti (1.16 million) led in terms of net

subscriber additions during September 2013 while Reliance (-

10.49 million) and MTNL (-0.23 million) were worst performers

Table 4.2

Shows the share of various telecom service providers and their overall rank for the period of the month September

2013

Source: TRAI Website

Table 4.2 shows the share of various telecom service providers and

their overall rank for the period of the month September 2013.As the

data depicts the market share of the Bharti group is at maximum

level.

Table 4.3

Share of various telecom service providers state wise and their overall rank for the period of September 2013

Source: TRAI Website

Table 4.3 shows the level of subscriber base as per the circle wise

for the month of September 2013 for the various states across

India.As per the state it is being observed in the table that

Maharashtra and Goa is at the top rank in terms of subscriber base.

Table 4.4

SUBSCRIBER BASE OF WIRELESS (GSM AND CDMA) SERVICES

FROM 2004-05 TO 2009-10

(SUBSCRIBER BASE IN MILLIONS)

Source: Service Provider

Data includes WLL (F) subscribers.44 Annual Report 2009-10

4.3 Conclusion:

While understanding and analyzing the Interview of Indian Telecom

Industry by scenario in Indian perspective, phenomenal growth has

been observed. Since globalization, privatization in telecom sector

brought tremendous volatility in the fixed and mobile telephone

segment. Growth of Individual companies and overall sector has

given a support to the growth Indian colony as a whole

CHAPTER-5

MARKETING STRATEGYOF BSNL

5.1 HISTORY OF BSNL TELECOM:

The foundation of Telecom Network in India was laid by the British

sometime in 19th century. The history of BSNL is linked with the

beginning of Telecom in India. In 19th century and for almost entire

20th century, the Telecom in India was operated as a Government of

India wing. Earlier it was part of erstwhile Post & Telegraph

Department (P&T). In 1975 the Department of Telecom (DoT) was

separated from P&T. DoT was responsible for running of Telecom

services in entire country until 1985 when Mahanagar Telephone

Nigam Limited (MTNL) was carved out of DoT to run the telecom

services of Delhi and Mumbai. It is a well known fact that BSNL was

carved out of Department of Telecom to provide level playing field to

private telecoms. Subsequently in 1990s the telecom sector was

opened up by the Government for Private investment, therefore it

became necessary to separate the Government’s policy wing from

Operations wing. The Government of India corporatized the

operations wing of DoT on October 01, 2000 and named it as Bharat

Sanchar Nigam Limited (BSNL).BSNL operates as a public sector.

BSNL, then known as the Department of Telecommunications, had

been a near monopoly during the socialist period of the Indian

economy. During this period, BSNL was the only telecom service

provider in the country. MTNL was present only in Mumbai and New

Delhi. During this period BSNL operated as a typical state-run

organization, inefficient, slow, bureaucratic, and heavily unionised.

As a result subscribers had to wait for as long as five years to get a

telephone connection. The corporation tasted competition for the

first time after the liberalisation of Indian economy in 1991. Faced

with stiff competition from the private telecom service providers,

BSNL has subsequently tried to increase efficiencies itself. DoT

veterans, however, put the onus for the sorry state of affairs on the

Government policies, where in all state-owned service providers

were required to function as mediums for achieving egalitarian

growth across all segments of the society. The corporation (then

DoT), however, failed to achieve this and India languished among

the most poorly connected countries in the world. BSNL was born in

2000 after the corporatisation of DoT. The corporatisation of BSNL

was undertaken by an external international consulting team

consisting of a consortium of A.F.Ferguson & Co, JB Dadachanji and

NM Rothschild - and was probably the most complex corporatisation

exercise of its kind ever attempted anywhere because of the

quantum of assets (said to be worth USD 50 Billion in terms of

breakup value) and over half a million directly and indirectly

employed staff. Satish Mehta, who led the team later confessed that

one big mistake made by the consortium was to recommend the

continuation of the state and circle based geographical units which

may have killed the synergies across regions and may have actually

made the organisation less efficient than had it been a seamless

national organisation. Vinod Vaish, then Chairman of the Telecom

Commission made a very bold decision to promote younger talent

from within the organisation to take up a leadership role and

promoted the older leaders to a role in licensing rather than in

managing the operations of BSNL. The efficiency of the company has

since improved, however, the performance level is nowhere near the

private players.

The corporation remains heavily unionized and is comparatively slow

in decision making and its implementation, which largely acts at the

instances of unions without bothering about outcome. Management

has been reactive to the schemes of private telecom

players. Though it offers services at lowest tariffs, the private players

continue to notch up better numbers in all areas, years after year.

BSNL has been providing connections in both urban and rural areas.

Pre-activated Mobile connections are available at many places

across India. BSNL has also unveiled cost-effective broadband

internet access plans (DataOne) targeted at homes and small

businesses. At present BSNL enjoy's around 60% of market share of

ISP services.

2007 was declared as "Year of Broadband" in India and BSNL

announced plans for providing 5 million broadband connectivity by

the end of 2007. BSNL upgraded Dataone connections for a speed of

up to 2 Mbit/s without any extra cost. This 2 Mbit/s broadband

service was provided by BSNL at a cost of just US$ 11.7 per month

(as of 21 July 2008 and at a limit of 2.5GB monthly limit with 0200-

0800 hrs as no charge period). Further, BSNL is rolling out new

broadband services such as triple play BSNL planned to increase its

customer base to 108 million customers by 2010. With the frantic

activity in the communication sector in India, the target appears

achievable.

BSNL is a pioneer of rural telephony in India. BSNL has recently

bagged 80% of US$ 580 m (INR 25 billion) Rural Telephony project of

Government of India.

On 20 March 2009 BSNL advertised the launch

of BlackBerry services across its Telecom circles in India. The

corporation has also launched 3G services in select cities across the

country. Presently, BSNL and MTNL are the only players to provide

3G services, as the Government of India has completed auction of

3G services for private players. BSNL shall get 3G bandwidth at

lowest bidder prices of Rs 185 billion, which includes Rs

101.86 billion for 3G and Rs 83.13 billion for BWA.

As of December 2011, many other private operators have started

rolling out their 3rd Generation (aka 3G) services alongside and are

enjoying some success in their campaigns to get market share.

While BSNL still maintains its connectivity standard and expands to

many more areas including rural areas with their 3G services. Also

the network infrastructure has been upgraded from to provide 3.6

Mbit/s to 7.2 MBits/sec. It is enjoying a slow but somewhat steady

success in gaining market share in this regard.

The introduction of MNP(Mobile Number Portability) which is an

service that lets the consumer change wireless service providers

while retaining their actual mobile number, BSNL has seen many

customers opting for this service to move away from the services to

other operators. Despite this as the Indian Wireless market grows

BSNL still has a loyal base of subscribers and many more subscribers

being added to it every day. This provides customer services for 95

million as of June 2011.

BSNL announced the discontinuation of its telegram services from 15

July 2013, after 160 years in service. It was opened to the public in

February 1855; in 2010 it was upgraded to a web-based messaging

system in 2010, through 182 telegraph offices across India.

5.2 ORGANISATION STRUCTURE:

Corporate structure of BSNL Board consists of CMD & Five full time

Directors Human Resource Development (HRD), Planning & New

Services, Productions & Operations, Finance and Commercial &

Marketing, who manages the entire gamut of BSNL operations. There

are five other Directors in the full Board of BSNL. CMD (Chairman &

Managing Director) – Shri Rakesh Kumar Upadhyay

Director – Consumer Fixed Access (CFA) – Shri.N.K.Gupta Director

(Finance) – Shri KCGK Pillai Director (HRD) & (Enterprise)- Shri

A.N.Rai Government Director – Shri Shahbaz Ali.

ORGANISATIONAL CHART

CMD

CGMs

5

Full Time

Directors

23 Circle

CGMs

4

Telecom Project

CGMs

4

Telecom Region

CGMs

T&D

CGM

ALTTC

CGM

GM

TD

TDM

DGM

Divisional

Engineer

Sub

Divisional

Engineer

JTO

5

Other

Directors

Source : http://bsnl.co.in/infomanual.pdf

Chart 5.1

DEPARTMENT ORGANISATION STRUCTURE:

Source : http ://cca.ap.nic.in/telecom.pdf

Chart 5.2

BSNL doesn’t follow line & staff structure; it follows only simple line

structure the orders are given by the hierarchy & superiors & it

should be followed by the subordinates.

5.3 FUNCTIONS AND ACTIVITIES OF BSNL :

Important functions of T&D Circle can widely be classified as follows:

1) Acceptance and Testing(A/T) of Switching Systems more than

2K capacity.

2) Acceptance and Testing(A/T) of Transmission Systems more

than 8 mbps capacity.

3) Issue of Engineering Instructions

4) Power & Telecom Co-ordination Committee

5) Publishing TELECOMMUNICATIONS journal.

6) Investigation of fire cases.

7) Sample check of installations done & Acceptance and

Testing(A/Ted) by Territorial Telecom Circles.

8) Providing Webbased Acceptance Testing Offer Managment

System(ATOMS) for Territorial Circles and Corporate Offices.

This circle has been playing an important role in the

introduction of new Telecom systems and technologies by

participating in validation of equipments/ systems and

participation in various working groups for preparation of

technical specifications

A/T OF SWITCHING SYSTEMS:

Acceptance testing is carried out for all types of Electronic

Exchanges like E10B, C--DOT MAX, EWSD, NEAX--61E, AXE--10, OCB-

283, FETEX-150 NIB, ISDN, WLL, IMPCS etc.

A/T OF TRANSMISSION SYSTEMS

Long distance Transmission systems which form the back-bone of

National Trunk Network consisting of Microwave, Satellite, Optical

>Fibre Cable are also subjected to rigorous Acceptance testing to

ensure reliable and trouble free NSD & ISD facilities and Data

transmission. All the transmission systems installed by Telecom

Projects at Mumbai,Chennai,>Kolkata and New Delhi and also by

Task Force at >Guahati are A/Ted by this unit.

ISSUE OF ENGINEERING INSTRUCTIONS:

T & D Circle issues Engineering instructions on different topics for

use by the field units of the Department. In the current year 2003-

04, 14 new >EIs were finalized covering latest switching and

transmission systems for the benefit and use of the field staff of

theDepartment.

POWER & TELECOM CO-ORDINATION COMMITTEE:

In order to ensure safety of Telecom assets & personnel and

interference free working of Telecom >systems, Telecom Co-

ordination Committee (PTCC) has been set-up in the year 1949. The

main function of PTCC is to examine all new cases of power and

telecom lines and cables and recommend protection measures in

order to ensure safe and satisfactory working of Telecom systems.

Major co-ordination problems in the field are settled in PTCC meeting

being held regularly at Central, State and Divisional state levels. At

central level, policy matters are decided and guidelines issued so

also the unsettled cases at state level are discussed and settled.

During the year 2003-04 , 261 Power and 54 Telecom Central PTCC

cases involving about 6930.38 and 643.527 respectivley route kms

and 113 Power State level cases were approved by PTCC.

PUBLISHING TELECOMMUNICATIONS JOURNAL:

T & D Circle is publishing a technical journal titled

TELECOMMUNICATIONS since 1951. The journal is being published

on a bimonthly basis. The Journal has entered into 54th year of

publication. The circulation of the journal is around 7000 copies and

quite popular in the telecom sector.

INVESTIGATION OF FIRE CASES:

T & D Circle is playing important role in investigation of fire

incidences in Telecom installations.

5.4 PRODUCTS OF BSNL :

When it comes to connecting the four corners of the nation, and

much beyond, one solitary name lies embedded at the pinnacle -

BSNL. A company that has gone past the number games and the

quest to attain the position of a leader . It is working round the clock

to take India into the future by providing world class telecom

services for people of India. BSNL is India's no. 1 Telecom Service

provider and most trusted Telecom brand of the Nation.  Driven by

the very best of telecom technology from chosen global leaders, it

connects each inch of the nation to the infinite corners of the globe,

to enable you to step into tomorrow.

1. Data One

2. Sancharnet

3. ISDN

4. Web Hosting

5. MPLS-VPN

6. Leased Line

7. Wi-Fi

8. Web Colocation

DETAILS OF BSNL PRODUCTS :

Bharat Shanchar Nigam Ltd. is in the process of commissioning of

a world class, (multi-gigabit,) multi-protocol, convergent IP

infrastructure through National Internet Backbone-II (NIB-II), that will

provide convergent services through the same backbone and

broadband access network. The Broadband service will be available

on DSL technology (on the same copper cable that is used for

connecting telephone), on a countrywide basis spanning 198 cities.

In terms of infrastructure for broadband services NIB-II would put

India at par with more advanced nations. The services that would be

supported includes always-on broadband access to the Internet for

residential and business customers, Content based services, Video

multicasting, Video-on-demand and Interactive gaming, Audio and

Video conferencing, IP Telephony, Distance learning, Messaging:

plain and feature rich, Multi-site MPLS VPNs with Quality of Service

(QoS) guarantees. The subscriber will be able to access the above

services through Subscriber Service Selection System (SSSS) portal.

Keeping pace with the technological trend to provide latest and

varied value added services to its customers, BSNL harnesses IP

Infrastructure based on MPLS Technology to offer world class IP VPN

services. MPLS is an acronym for "Multi Protocol Label Switching".

MPLS VPN is a technology that allows a Service Provider like BSNL to

have complete control over parameters that are critical to offering

its customers service guarantees with regard to bandwidth

throughputs, latencies and availability. The technology enables

secure Virtual Private Networks (VPN) to be built and allows

scalability that will make it possible for BSNL to offer assured growth

to its customers without having to make significant investments.

BSNL would now be geared to provide Bandwidth on demand, Video

Conferencing, Voice Over IP (VOIP) and a host of other value added

services that could revolutionize the way a corporate business

works!. MPLS based VPNs reduce customer networking complexity,

costs and totally do away with the requirement of in-house technical

work force. Rather than setting up and managing individual point-to-

point circuits between each office using pair of Leased Lines, MPLS

VPN customers need to provide only one connection from their office

router to a service provider edge router.

BSNL has tied up with various Networking solution providers to

provide end-to-end solution to its valued customers, including

Customer End (CE) routers and other networking components.

Sancharnet is a country wide Internet Access Network of Bharat

Sanchar Nigam Limited, India. It offers Dedicated and Dialup (PSTN &

ISDN) Internet Access Services across all the major cities in India

5.5 MAIN SERVICES BEING PROVIDED BY BSNL :

BSNL provides almost every telecom service, however following are

the main Telecom Services being provided by BSNL in India:-

1. Universal Telecom Sevices : Fixed wireline services & Wireless

in Local loop (WLL) using CDMA Technology

called bfone and Tarang respectively. BSNL is dominant operator in

fixed line. As on December 31, 2007, BSNL had 81% marketshare of

fixed lines.

2. Cellular Mobile Telephone Services: BSNL is major provider of

Cellular Mobile Telephone services using GSM platform under

brandname Cellone. Pre-paid Cellular services of BSNL are know as

Excel. As on March 31, 2007 BSNL had 17% share of mobile

telephony in the country.

3. Internet: BSNL is providing internet as dial-up connection

(Sancharnet) and ADSL-Broadband Dataone. BSNL has around 50%

marketshare in broadband in India. BSNL has planned aggressive

rollout in broadband for current financial year.

4. Intelligent Network (IN): BSNL is providing IN services like tele-

voting, toll free calling, premium calling etc.

BSNL Units

BSNL is divided into a number of administrative units, termed as

telecom circles, metro districts, project circles and specialized units,

as mentioned below:-

Telecom Circles: Telecom Circles & Metro districts are responsible for

providing service to the customers. There are 24 Telecom Circles

and 2 Metro districts.

5.6 BSNL Present & Future

Since its corporatisation in October 2000, BSNL has been actively

providing connections in both Urban and Rural areas and the

efficiency of the company has drastically improved from the days

when one had to wait for years to get a phone connection to now

when one can get a connection in even hours. Pre-activated Mobile

connections are available at many places across India. BSNL has also

unveiled very cost-effective Broadband internet access plans

(DataOne) targeted at homes and small businesses.

2007 : A Land Mark Tear of Broadband

2007 has been declared as “Year of Broadband” in India and BSNL is

in the process of providing 5 million Broadband connectivity by the

end of 2007. BSNL has upgraded existing Dataone (Broadband)

connections for a speed of up to 2 MB/s without any extra cost. This

2 MB/s broadband service is being provided by BSNL at a cost of just

US$ 5.5 per month. Further, BSNL is rolling out new Broadband

services as Triple play (telecommunications).

BSNL is planning to increase its customer base to 108 million

customers by 2010. With the frantic activity in the communication

sector in India, the target appears achievable, however due to

intense competition in Indian Telecom sector in recent past BSNL’s

growth has slowed down.

BSNL is pioneer of Rural Telephony in India. BSNL has recently

bagged 80% of US$ 580 m (INR 2,500 crores) Rural Telephony

project of Government of India.

During Financial Year 2006-2007 (From April 01, 2006 to March

31, 2007) BSNL has added 9.6 million new customers in various

telephone services taking its customer base to 64.8 million. BSNL’s

nearest competitor Bharti Airtel is standing at a customer base of 39

million. However, despite impressive growth shown by BSNL in

recent times, the Fixed line customer base of BSNL is declining. In

order to woo back its fixed-line customers BSNL has brought down

long distance calling rate under OneIndia plan, however, the success

of the scheme is not known. However, BSNL faces bleak fiscal 2006-

2007 as users flee, which has been accepted by the CMD BSNL.

Presently there is an intense competition in Indian Telecom sector

and various Telcos are rolling out attractive schemes and are

providing good customer services. However, BSNL being legacy

operator and its conversion from a Government Department, earns

lot of criticism for its poor customer service. Although in recent past

there have been tremendous improvement in working of BSNL but

still it is much below the Industry’s Expectations. A large aging

(average age 49 years(appx)) workforce (300,000 strong), which is

mostly semi-illetrate or illeterate is the main reason for the poor

customer service. Further, the Top management of BSNL is still

working in BSNL on deputation basis holding Government employee

status thus having little commitment to the organisation. Although in

coming years the retirement profile of the workforce is very fast and

around 25% of existing workforce will retire by 2010, however, still

the workforce will be quite large by the industry standards. Quality

of the workforce will also remain an issue.

5.7 BSNL MAKETING STRATEGIES :

The state-owned operator’s biggest strength indeed is its extensive

infrastructure. BSNL has about 650,000 km of optic fibre cable (OFC)

network across the country, which is significantly larger than any

other pan-Indian player’s. It also has a wide network of copper wires

and tower sites that covers almost all populated villages in the

country through village public telephones. Its GSM services are

available in over 350,000 villages. BSNL offers connectivity in

remote areas like the Siachen Glacier as well as inaccessible areas in

Madhya Pradesh, Himachal Pradesh and the Northeast.

Incorporated in 2000, BSNL became the largest mobile operator in

the country after launching these services in 2002. By 2006, it had a

mobile customer base of 26 million and a market share of 18 per

cent.

It is ranked fifth in the mobile segment with 97.99 Million subscribers

as of June 2013, after Bharti Airtel (190.91 Million users). However,

competition from private players, a capacity crunch, the PSU burden,

political interference, and the inability to keep pace with change in

one of the world’s most vibrant telecom markets started telling on

the company’s performance.

“BSNL is a large communications services provider in India across

the fixed and mobile telephony segments. However, it is no longer

profitable. The company has faced stiff competition on two fronts –

the consumer shift from fixed line to mobile telephony and price

wars in the mobile space. The company has not been able to address

these issues and has, therefore, accumulated losses year after

year,” says Harish Bijoor brand expert and chief executive officer,

Harish Bijoor Consults, Inc. BSNL is optimistic about a turn around

after 2018 if it receives the financial assistance

BSNL has been losing subscribers in both the wireless and wireline

segments. The wireline subscriber loss has had a bigger impact on

the operator as this business was its mainstay for years. As of June

2013, BSNL’s wireline user base stood at 19.89 million as compared

to 40 million three years ago. The income from wireline telephony

dropped from Rs 126.68 billion in 2007-08 to Rs 56.53 billion in

2011-12. That said, BSNL still holds over 65 per cent share in this

market.

Moreover, the company has not been able to capitalise on the 3G

opportunity despite having the first-mover advantage in this space.

It has a presence in about 1,300 cities, but accounts for only 3

million of the total 15 million 3G users in India.

The operator, however, has a comfortable lead in the broadband

segment with a 65.6 per cent market share as of June 2013. It has

set up a world-class, multi-gigabit, multiprotocol convergent IP

infrastructure that supports convergent services like voice, data and

video.

BSNL is also the third largest mobile tower operator with a portfolio

of about 60,000 towers.

OBJECTIVES

To be the Leading Telecom Services provider by achieving

higher rate of growth so asto become a profitable enterprise.

To provide quality and reliable fixed telecom service to our

customer and thereby increase customers confidence

To provide customer friendly mobile telephone service of high

quality and play leading role as GSM operator in its area of

operation. Strategy for:

Rightsizing the manpower

Providing greater customer satisfaction Contribute towards:

Broadband customers base of 20 Mn in India by the end of 2011-12

as per broadband policy 2004. Providing telephone connections in

villages as per Government policy. To leverage the existing

infrastructure of BSNL for facilitating implementation of other

government programmes and initiatives particularly in the rural

areas.

Financial Performance Financial Performance In Rs Crores

Parameters 2006-07 2007-08 2008-09 2009-10 2010-11Income

39,715 38,053 35,812 32,045 29687Expenditure 31,466 33,636

34,354 34,078 36001Net Profit 7,806 3,009 575 (-)1,823 (-)6384

SWOT ANALYSIS

Huge Optical Fibre network and associated bandwidth

Huge Resources

Total telecom service provider

Experienced telecom service provider

Service in Rural Areas

WEAKNESS

Poor marketing strategy Bureaucratic organizational set up

Inflexibility in mindset (DOT period legacies)Limited number of value

added services Legacy of poor service image Huge and aged

manpower Procedural delay slack of strategic alliances Problems like

outdated technologies, unproductive rural assets, social obligations,

political interference, Poor IT penetration within organization.

OPPORTUNITIES

• Tremendous market growing at 20 lakh customers per month•

Under tapped broadband services• Untouched international market•

Can capitalize on public sector image to grab government‟s ICT

initiatives• Leveraging the brand image to source funds• Fuller

utilization of slack resources• Can make a kill through deep

penetration and low cost advantage• Broaden market expected from

convergence of broadcasting, telecom and entertainment industry.

THREATS

• Competition from private operators• Keeping pace with fast

technological changes• Market maturity in basic telephone

segment• Multinational eyeing Indian telecom market• Decreasing

per line revenues due to competitive pricing• High bargaining power

of customers• Private operators demand to do away with ADC can

seriously effect revenues• Policies of government like “OneIndia”

rates.

Critical Success Factors• the limited number of areas in which

satisfactory results will ensure successful competitive performance

for the individual, department, or organization• activities required

for ensuring the success your business. Critical success factors may

change over time, and may include items such as product quality,

employee attitudes, manufacturing flexibility, and brand awareness

CRITICAL SUCESS FACTORS:

• Industry CSF’s resulting from specific industry characteristics;•

Strategy CSF’s resulting from the chosen competitive strategy of the

business;• Environmental CSF’s resulting from economic or

technological changes; and• Temporal CSF’s resulting from internal

organizational needs and changes.

Rockart and Bullen presented five key sources of CSF’s:

The industry,

Competitive strategy and industry position,

Environmental factors,

Temporal factors, and

Managerial position

The Industry Critical success CSF’s common to all companies

operating within the same industry. factor Industry’s set of

characteristics define its own CSF’s Different each organization has

its own unique goals so while there may be some industry standard –

not all firms in one industry will have identical CSF’s. Some trade

associations offer benchmarking across possible common CSF’s.

Competitive strategy and The nature of position in the marketplace

or the adopted strategy to industry position Critical success gain

market share gives rise to CSF’s factor Differing strategies and

positions have different CSF’s A firm’s current position in the

industry (where it is relative to other competitors in the industry and

also the market leader), its strategy, and its resources and

capabilities will define its CSF’s The values of an organization, its

target market etc will all impact the CSF’s that are appropriate for it

at a given point in time. Environmental Factors Critical Economic,

regulatory, political, and demographic changes create CSF’s success

factor for an organization. These relate to environmental factors that

are not in the control of the organization but which an organization

must consider in developing CSF’s Examples for these are the

industry regulation, political development and economic

performance of a country, and population trends.

Temporal Factors Critical short-term situations, often crises. success

factor Critical one-off CSF’s resulting from a specific event

necessitating there In collusion. success factor Critical success factor

Managerial Position Critical An individual role may generate CSF’s as

performance in a specific success factor Critical manager’s area of

responsibility may be deemed critical to the success of an success

factor organization. In organizations with departments focused on

customer relationships, a CSF for managers in these departments

may be customer relationship management.

STRATEGY FORMULATION:

Clear technology strategy Customer Orientation Strategy Extensive

use of IT Shorten the purchase-decision cycle marketing strategy

needs to be redefined and should focus around Value Added

Services Overhaul its Human Resource Management strategy

Restructuring of organization Immediate implementation of CDR

based billing. Revenue generation through Value Added

Services(VAS).

CLEAR TECHNOLOGY STRATEGY:

BSNL should go in for innovative products based on convergent

technology in order to acquire dominant market position. This can be

achieved by –Replacement of all the outdated technologies

immediately, Redeployment of unutilized capacities should be

considered first. Early deployment of cost effective wifi/wi max

technologies Increasing the capital investment in convergent

technologies even if it renders certain in use technologies

redundant. In spite of cost implications the alternatives of

scaling/upgrading of existing technology should not be considered

since it will not yield the desired results. Instead the focus should be

on achieving dominant market position through large-scale

deployment of new technology

CUSTOMER ORIENTATION STRATEGY:

It will retain existing customers as well as to attract new customers

by Creating a Service-Oriented culture within the organization.

Introducing flexible Registration Terms so that new customers are

attracted. Educating the customer about services in detail and

respective tariff structure Introducing service at door-step. A

successful loyalty program becomes the driving force in customer

relationship management strategy

EXTENSIVE USE OF IT :

It will improve operations but can add to greater customer

satisfaction. Despite being technology intensive organization IT

penetration in BSNL is not high. Presently, the use of IT in BSNL is

restricted to – DQ (Directory Enquiry), IVRS (Interactive Voice

Response System) Accounting and billing systems Commercial &

Fault Repair System package Telephone Directory on CD ROM and

on the Internet. BSNL should create intra-BSNL IT network

connecting all the SDCAs (short distance charging area)through VPN

network for the organization’s own use to improve efficiency and

transparency. Instead of integrating the existing segment specific

software, it is recommended that standard integrated packages

should be considered.

SHORTEN THE PURCHASE-DECISION CYCLE:

BSNL should redefine procurement processes to shorten the

purchase-decision cycle, which is critical in project implementation

to any telecom service provider. BSNL should enter in long term

supply contract with world-class players to come out of mantra of

tendering process. This will help BSNL to counter the strategy of its

competitors to stall the very procurements of critical items.

BSNL’S MARKETING STRATEGY NEEDS TO BE REDEFINED:

It should focus around Value Added Services, building strong

distribution chain and differential treatment to premium/corporate

customers Marketing is going to be the key to success – BSNL should

come out with a variety of schemes for the end subscriber, both

commercial and residential.

HUMAN RESOURCE MANAGEMENT:

It has a vast manpower of 2,82,690 as per march 2011. To meet the

technological challenges, employees need to be trained for

technology up-gradation, modernization, computerization etc in a

targeted manner. Though different training programs are being run

in various training centers of BSNL to impart technology based

training, they seem to be outdated in the fast changing competitive

environment and with formation of corporate. The dynamics of

transition from a lethargic government organization to a

professionally running company requires tremendous up gradation in

Human Resources.

There are various aspects of managing an organization that many

employees even at top levels in BSNL are unaware of. At one hand

the competition has brought in the requirement to learn professional

skills in fields like Marketing, HRD, Finance etc.

BSNL need to mend its Human Resource Management strategy and

should focus on – Tie up with top business schools in India for

training their managers at various levels. Redeploying its manpower

from bigger cities to smaller ones Coming out with VRS/CRS for

manpower above the age of 50. Creating value through employee

motivation and should develop reward and punishment system The

VRS/CRS scheme is likely to be opposed by the unions and the

implementation may be difficult in the politicized environment.

However, rightsizing the organization is of paramount importance for

the long run interest.

RESTRUCTURING OF ORGANIZATION:

BSNL’s organization structure still remains more or less functional in

structure. Restructuring of organization can with each

product/segment considered as a separate business will help in

Better management Improved segmental efficiencies Improved

organizational communication Better performance monitoring

Develop focus on revenue

REVENUE GENERATION THROUGH VALUE ADDED SERVICES(VAS)

The major chunk of these revenues have come from basic services

and only recently the revenues from cellular business (to the tune of

Rs 3000 cr. per annum) . Moreover ADC(Access Deficit Charge) and

inter-connect charges income have decreased due to influence of

TRAI. With continuous decrease in long distance call rates and

growth of private network the revenues from ADC and inter-connect

charges will eventually disappear. BSNL should realize that the basic

services market and revenues from it are also shrinking and it is

necessary for a telecom service provider like BSNL to concentrate on

increasing revenues through VAS.

While many of the operators in India and outside are generating

more than 25% of their revenues through VAS, BSNL cannot

attribute even 5% of its revenues to VAS. I

• In order to succeed the strategy of BSNL should be built around

strengthening its VAS like SMS, MMS, broadband content generation

etc. and marketing them. BSNL can also go for large-scale tie-ups

with content providers.

• BSNL should change its very strategy of acting as follower to that

of leader. Instead of reacting to other operators move it should start

acting proactively. The overall strategy of BSNL can be of

concentrating on the mobile and broadband business in near future

and to immediately phase out loss making businesses like telegraph.

BSNL can leverage on its pan India reach and economies of scale to

achieve overall cost leadership. At the same time capital

investments can be made in next generation networks where stress

should be on Wi-Max, content based data service and VOIP.

Emphasis on organizational restructuring coupled with customer

orientation and operational efficiency can help BSNL find place in

Asian Telecom market.

The Below stated is the details of comprehensive plans and tariffs,

BSNL frame for the different segment of society. The plans and tariff

are being revised from time to time as per the market scenario and

customer requirement.