harsh vardhan kaushik (09bs0000850) intrim report

8/7/2019 harsh vardhan kaushik (09bs0000850) intrim report

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COMPARATIVE ANALYSIS BETWEEN THREE

TELECOM SERVICE PROVIDERS (AIRTEL) ,

(RELIANCE COMMUNICATONS) AND (BSNL)

REGARDING 3G SERVICES AND FUTURE


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A

PROJECT REPORTON

COMPARATIVE ANALYSIS BETWEEN

THREE TELECOM SERVICE PROVIDERS

(AIRTEL) , (RELIANCE COMMUNICATONS)AND (BSNL) REGARDING 3G SERVICES

AND FUTURE PROSPECTIVE OF 3G

SERVICES IN INDIA.

Submitted by:

Harsh Vardhan Kaushik

(09BS0000850)

Submitted to:

Prof. Vinay Aggarwal

ICFAI Business School

Chandigarh

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Acknowledgement

Before I proceed further I wish to spend some time in expressing my gratitude to all those who

have been involved in guiding and helping me out during my entire research project.

I am grateful to IBS Chandigarh for giving me the opportunity to undergo this

research project. My project has been enriching and value adding experience. I

would like to equivocally thank the Dean, Prof. Bhagat Ram, who gave me this

opportunity to work under this project.

I would take this opportunity to express my sincere accolade to my faculty guide,

Prof. Viney Aggrawalfor facilitating me at various phases of the project. At the

very outset of this research report, I would like to acknowledge the contribution of

all those who have been instrumental in helping and guiding me in course of this

effort.

Above all, I am grateful to all the respondents who took out time and helped to

make this project a reality.

Harsh Vardhan Kaushik

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Abstract

India is the fourth largest telecom market in Asia after China, Japan and South Korea. The

Indian telecom network is the eighth largest in the world and the second largest among

emerging economies. At current levels, telecom intensiveness of Indian economy measured

as the ratio of telecom revenues to GDP is 2.1 percent as compared with over 2.8 percent in

developed economies.

Communication sector or mobile telephony is the most active and attractive sector of last

decade. While the telecom industry itself has been present since ages in our country, it is

only the recent past it has witnessed so much dynamism. The emergence of Telecom sector

in India has more to do with the increased number of service providers, especially post-

liberalization, increase in product variety, and increase in economies of scale, with the aid

of modern supply and distribution solutions.

Indian Telecom industry is going through a transition phase with the introduction of the third

genration network or we can say 3G.

This report will cover the study of future prospects of 3G services in India. It will cover

the changes occurred and future changes in the sector, challenges, opportunities,

contribution in employment and the economy of country.

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CONTENTS

Telecom Industry ........................................................................................................ 7

Major Players .............................................................................................................. 9

What is 3G? ............................................................................................................. 10

Evolution from 2G to 3G ........................................................................................ 11

GSM evolution to 3G ............................................................................................. 11

What will 3G mean to users? .................................................................................... 12

Features of various services ..................................................................................... 13

How is 3G different from 2G and 4G? ....................................................................... 14

Limitations of 2G ...................................................................................................... 14

The Advantages of 3G Technology ........................................................................... 15

USER BENEFITS ........................................................................................................ 17

OPERATOR BENEFITS AND MEDIA HOUSE BENEFITS ................17

Issues of 3G ............................................................................................................. 18

Current status and Impact of 3G in India ................................................................. 21

Roll-out strategies .................................................................................................... 22

Market opportunity .................................................................................................. 23

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Getting subscribers on the 3G bandwagon .............................................................. 23

Future of 3G ............................................................................................................. 24

Which companies have applied for 3G license? .................................................... 25

What is the pricing issue in India? ......................................................................... 25

What about the security in a 3G network? ............................................................ 25

Where was 3G spectrum first introduced? ............................................................ 25

CHALLENGES ............................................................................................................ 26

Weakness in current telecom sector (the recent case of 2G scam) .........................26

Limitations due to laws of TRAI............................................................................... 26

Lack of basic and Secondary infrastructure ............................................................. 26

Poor distribution network ......................................................................................... 26

Economies of scale ................................................................................................... 26

Looking Ahead...................................................................................................... 27

BSNL and MTNL are very differently placed in comparison to other private players. It

is not yet known when 3G auctions will happen and which companies will be in the

spectrum run. With a huge amount of investment only to acquire license, a lot of

other costs would be involved when it comes to network building andimplementation........................................................................................................ 27

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Telecom IndustryObjective: Future of 3G Technology in Indian Telecom Sector.

The Indian telecommunications industry is one of the fastest growing in the world and India is

projected to become the second largest telecom market globally by 2010.India added 113.26

million new customers in 2008, the largest globally. In fact, in April 2008, India had already

overtaken the US as the second largest wireless market. To put this growth into perspective, the

countrys cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5

million customers added every month.

According to the Telecom Regulatory Authority of India (TRAI), the total number of telephoneconnections (mobile as well as fixed) had touched 385 million as of December 2008, taking thetelecom penetration to over 33 per cent. This means that one out of every three Indians has atelephone connection, and telecom companies expect this pace of growth to continue in 2009 aswell.

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"NTP 1999 brought in the third generationsof reforms in the Indian telecommunicationssector.

India is one of the fastest growing telecommarkets in the world with an addition of

more than 6 million connections per month.FDI inflow in Indian Telecom sector is thehighest among all sectors. It is emerging astelecom manufacturing hub. Year 2007 wasdeclared as "Year of Broadband" in India.

It is projected that the industry will generate revenues worth US$ 43 billion in 2009-10.

Rural India had 76.65 million fixed and Wireless in Local Loop (WLL) connections and 551,064Village Public Telephones (VPT) as on September 2008. Therefore, 92 per cent of the villages inIndia have been covered by the VPTs. The target of 80 million rural connections by 2010 is

likely to be met during 2008 itself. Universal Service Obligation (USO) subsidy support schemeis also being used for sharing wireless infrastructure in rural areas with around 18,000 towers by2010.

The Indian rural market is going to be the next big thing for wireless telecom providers. With thetele-density in rural areas being still about 10 per cent against the national average of about 21per cent, there seems to be huge untapped potential for mobile phone penetration in rural India.The government also plans an investment of US$ 2 billion, during 2008 to 2009, for thedevelopment of around 100,000 community service centers in rural India to provide broadbandconnectivity.

Additionally, by 2010, the government targets:

80 million rural connections Mobile coverage of 90 per cent geographical area Internet Protocol Television (IPTV) in 600 towns Quadrupling manufacture Two-fold increase in telecom equipment R&D from the current level of 15 per cent.

Major PlayersThere are three types of players in telecom services:

-State owned companies (BSNL and MTNL) -Private Indian owned companies (Reliance Infocomm, Tata Teleservices,) -Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures,Escotel, Idea Cellular, BPL Mobile, Spice Communications)

Market Shares of Key IndiaMobile Operators, 2008

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What is 3G?

3G (Third Generation) is the latest wireless technology. It is also known as UMTS (Universal

Mobile Telecommunications System), an improvement over 2G (Second Generation) providing

wireless access to the data and information to the users from anywhere and anytime. It is thelatest mobile technology and in fact it is described by Cellular (2004) as being a generic name

for the most of mobile technologies.

3G cellular phones were first launched in Japan in October 2001. This 3G phone was designed

so users would be able to surf the Internet, view pictures of the people they are talking to, watch

movies and listen to music on their handsets .

International Mobile Telecommunications-2000 (IMT-2000), better known as 3G or3rd

Generation, is a family of standards for wireless communications defined by the International

Telecommunication Union, which includes GSM EDGE, UMTS, and CDMA2000 as well

as DECT and WiMAX. Services include wide-area wireless voice telephone, video calls, and

wireless data, all in a mobile environment. Compared to 2G and 2.5G services, 3G allows

simultaneous use of speech and data services and higher data rates (up to 14.4 Mbit/s on thedownlink and 5.8 Mbit/s on the uplink with HSPA+). Thus, 3G networks enable network

operators to offer users a wider range of more advanced services while achieving greater

network capacity through improved spectral efficiency.

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http://en.wikipedia.org/wiki/Video_callhttp://en.wikipedia.org/wiki/2Ghttp://en.wikipedia.org/wiki/2.5Ghttp://en.wikipedia.org/wiki/Megabithttp://en.wikipedia.org/wiki/Megabithttp://en.wikipedia.org/wiki/Spectral_efficiencyhttp://en.wikipedia.org/wiki/Video_callhttp://en.wikipedia.org/wiki/2Ghttp://en.wikipedia.org/wiki/2.5Ghttp://en.wikipedia.org/wiki/Megabithttp://en.wikipedia.org/wiki/Megabithttp://en.wikipedia.org/wiki/Spectral_efficiency


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Mobile telephony allowed us to talk on the move. The internet turned raw data into helpful

services that people found easy to use. Now, these two technologies are converging to create

third generation mobile services.

In simple terms, third generation (3G) services combine high speed mobile access with Internet

Protocol (IP)-based services. But this doesnt just mean fast mobile connection to the world wide

web. Rather, whole new ways to communicate, access information, conduct business, learn and

be entertained - liberated from slow, cumbersome equipment and immovable points of access. It

will enhance and extend mobility in many areas of our lives.

Evolution from 2G to 3G

GSM evolution to 3G

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What will 3G mean to users?

"Mobility" will be offered with many services that we currently regard as "fixed" indeed,Mobile operators believes that mobility will become the norm for many communication services.Well be able to make video calls to the office and surf the internet, or play interactive gameswith friends at home - wherever we may be. But 3G is not just about applications that requirehigh speed data rates. Its about convenience and speed of access.

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There are various technology comes under various forms of services like under 1G its AMPS,2G its CDMA, TDMA, GSM, PDC & 3G its W-CDMA, CDMA-2000,TD-SCDMA

TECHNOLOGY FEATURES

1G AMPS Advanced Mobile Phone Service -Analog voice service- No data service

2G CDMA Code Division Multiple Access - Digital voice service- 9.6K to 14.4K bit/sec.- CDMA, TDMA and PDC offer one-way data transmissions only- Enhanced calling features like callerID- No always-on data connection

TDMA Time Division Multiple Access

GSM Global System for MobileCommunications

PDC Personal digital cellular

3G W-CDMA Wide-band Code Division MultipleAccess

- Superior voice quality- Up to 2M bit/sec. always-on data

- Broadband data services like videoand multimedia- Enhanced roaming

CDMA-2000

Based on the Interim Standard-95CDMA standard

TD-SCDMA

Time-division synchronous code-division multiple-access

Features of various services

Services Features Speed Time to Download 3Min Mp3song

2G Phone Calls, VoiceMail, Receive SimpleEmail Messages 10kb/sec 31- 41 Min

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2.5G Phone calls/fax- Voice mail-Send/receive largeemail messages- Web browsings

Navigation/maps- New updates

64-144kb/sec 6-9min

3G Phone calls/fax- Global roaming- Send/receive largeemail messages- High-speed WebNavigation/maps

Videoconferencing- TV streaming- Electronic agendameeting reminder.

144kb/sec-2mb/sec 11sec-1.5min

How is 3G different from 2G and 4G?

While 2G stands for second-generation wireless telephone technology, 1G networks used areanalog, 2G networks are digital and 3G (third-generation) technology is used to enhance mobilephone standards.

3G helps to simultaneously transfer both voice data (a telephone call) and non-voice data (suchas downloading information, exchanging e-mail, and instant messaging. The highlight of 3G isvideo telephony. 4G technology stands to be the future standard of wireless devices.

Limitations of 2G Designed mainly for telephony application

Circuit-switched

High BER (Bit Error Rate)

Low data bit rate (< 14.4kbps)

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Too many standards globally

GSM, CDMA, PDC, PHS etc.

The Advantages of 3G Technology

Perform all those functions that they perform at present with their mobile devices but at

much higher speed than before.

Provides them with faster connectivity, faster internet access, and music entertainment

with improved quality.

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Can avail the benefits of video calling.

Clarity is better and the facility can be enjoyed as long as both of are using the 3G

technology.

Access any site on the Internet by using your phone as a modem for computer or laptop

and mail the important documents.

Downloading games and songs is much faster with this technology Can be also used for favorite search engines to find information on news headlines, get

information about the evening weather.

Provide with the data transmission speed of up to 2Mbps when the users are using the

phone on stationary mode.

Provides significantly faster data transfer rates of connectivity and increased networking

and most importantly the resistance to noise.

Increased the bit rate thus enabling the service providers to provide high speed internet

facilities, increased call volumes and host of the multimedia applications to their

customers.

All these services can be provided to the customers on the basis of the amount of datathey transmit and not on the time for which they use the service thus making the services

cheaper.

Beneficiary to the service providers as well as the intermediaries like the content

providers and the media houses who are looking for an additional platform market their

products. Basically it holds three way benefits to all the parties involved.

Improved performance over 2G, including:

Will ease spectrum constraints on the 2G networks and accommodatesubscriber growth

Will improve data opportunities as spectrum constraints are a major barrier to

adoption and usage; Indian consumers already own c2m 3G devices 3G spectrum will allow incumbents to differentiate services from new

entrants and regional players

Improved capacity

Improved coverage, enabling migration from a 2G deployment.

A high degree of service flexibility, including:

Support of a wide range of services with maximum bit rates above 2 Mbps

and the possibility for multiple parallel services on one connection;

A fast and efficient packet-access scheme.

A high degree of operator flexibility, including:

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Support of asynchronous inter-base-station operation;

Efficient support of different deployment scenarios, including hierarchical cell

structure and hot-spot scenarios;

Support of evolutionary technologies such as adaptive antenna arrays andmulti-user detection.

USER BENEFITS

OPERATOR BENEFITS AND

MEDIA HOUSE BENEFITS

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Issues of 3G

Although 3G was successfully introduced to users across the world, some issues are debated by

3G providers and users:

Expensive input fees for the 3G service licenses in some jurisdictions

Differences in licensing terms between states

Level of debt incurred by some telecommunication companies, which makes

investment in 3G difficult

Lack of state support for financially troubled operators

Cost of 3G phones

Lack of coverage in some areas

High prices for 3G in some countries

Demand for high speed services in a hand-held device

Battery life of 3G phones

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COMPARATIVE ANALYSIS BETWEEN

RELIANCE COMMUNICATIONS , AIRTEL AND

BSNL REGARDING 3G SERVICES IN INDIA

The analysis is done upon some parameters like:-

1. Customer market share

2. Revenue market share

3. Product and services

Customer market share:-

1. Bharti Airtel :- 29%

2. Reliance Communications :- 17%

3. BSNL:- 16%

As we can say from the above data that Airtel is aving maximum customer market share or

we can say the largest customer base in number of people who are using Airtel after that insecond number there is Reliance communications and in third number government owned

BSNL

If 3G services are rolled out in India then we can say the competition between Airtel and

Reliance communication is more rather then comparing to BSNL

The investment done buy the private companies to get the 3G spectrum is the huge sum of

amount and they want to recover it from the customer it happens only when the

organization having the large customer base but in case of BSNL its a government owned

company its not provide services for the profits they want that the customer must use the

service which is provided buy the BSNL.

REVENUE MARKET SHARE

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1. Bharti Airtel:- 31.5%

2. BSNL:- 9.2%

3. Reliance Communications:-11.5%

PRODUCTS AND SERVICES

3G Services offered by BSNL

3G services customers would have three monthly subscription options of Rs 350, Rs650 and Rs 1,350. Apart from this, customers would also get the 3G services througha bundle offer

The subscribers would be offered a plethora of services like live TV, high-speedmobile broadband and movie download through 3G services.

20paisa per second call charge from the customer.

3G services offered by Airtel

Mobile TV with 110 channels.

Net connect with high speed.

Video calling

High speed data transfer

Airtel 3g data cards

Airtel 3g broadband services

IPTV

3G Services offered by Relaince Communications

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3G ready GSM sim 3G broadband service through their latest Reliance NetConnect Broadband+

Evdo (3G).

Video calling

Mobile tv with 69 channels

Offer services with other handsets providers.

Current status and Impact of 3G in India

The success of 3G is going to depend on demand for superior quality voice services and dataheavy, media rich content. The initial pricing has been on the higher side and it will have to drop

if mass adoption is to ensue.

Spectrum policy in India has been the victim of slow decision-making, which has left thecountry lagging behind many others.

The delay in auction over three years has deprived Indian subscribers of the benefits of high-speed mobile data services available to over 300 million subscribers residing in over 125countries with significant concentration around the Americas, Europe, and South East Asiancountries.

This is also an opportunity for Indian software companies to join hands with service providers to

develop applications that will meet the needs of the Indian mobile user. At a later stage, thesecould be rolled out into other emerging markets..

3G in India is initially expected to provide additional spectrum for voice services. This wouldpave the way for data usage on mobile phones. This is vital as operators are focusing oncustomer acquisition as well as sticky offerings to prevent churn. 3G enables better VASservices due to the higher levels of bandwidth that it can accommodate. The technology isexpected to drive data card adoption. Currently, Tata Indicom and Reliance are the only playersin the data card segment. With more players coming into the market, sales are expected to boomwith competitive prices and attractive schemes.

Poor broadband penetration, a large untapped rural market, and the challenge of providing highbandwidth in rural areas using landlines are all factors favoring a 3G rollout. With 3G, networkoperators can offer wireless broadband services. Moreover, many operators are starved ofspectrum and as 3G offers four to five times the voice capacity of 2G spectrum, it is a cost-effective tool to deliver voice. Services beyond voice and text can be offered; 3G offers aplatform which can offer true multimedia services.

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The technology will be critical for operators in enabling the differentiation of their serviceportfolio, by providing a far richer service experience than is currently availableparticularly inthe deployment of audio-visual services.

The fundamental driver for 3G in India is to serve the countrys demand for broadband services.

From a technological point of view, in areas where no fixed-line infrastructure exists, deployinga mobile network is much cheaper and it can be rolled out a lot faster than wired infrastructure.

Revenue from Value added Services

Roll-out strategies

Starting in February 2009, BSNL and MTNLthe state-run operators who were pre-awarded3G licenseshave rolled out 3G services in 70 (BSNL) and two (MTNL) cities nationwiderespectively. The private telecom operators are in the process of planning their 3G networkinfrastructure and awaiting final approval from the DOT auction to start rolling out theirnetworks; they are ready to go fully operational within six months of spectrum allocation.

Despite the hype around 3G, MTNL and BSNL have attracted a few thousand subscribers forthese services. Lack of attractive applications and content, the high monthly charges and theanticipation of private players entering the 3G arena soon are the likely reasons for the lowuptake of 3G services. Meanwhile, Frost & Sullivan estimates that the number of 3G subscriberswill be around 7-8 million by the end of FY 2009-10.

In the first year of 3G operations, the operators are expecting 3G subscribers to pay about fivetimes the current 2/2.5G tariffs. 3G-enabled handsets and data modems for laptops are also likelyto be expensive. This is a steep increase and will target only niche demographics, but in thecoming three-four years the operators will see higher subscriber volumes and better operationalefficiencies and consequently the prices will drop to attract a wider audience. The challenge foroperators will be to offer wide coverage (including roaming), high quality service and attractive

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content in the initial years to sustain high-paying subscribers long enough to reach the tippingpoint of growth.

Market opportunity

According to the Federation of Indian Chambers of Commerce and Industry (FICCI), in India,the 3G subscriber base is expected to hit 90 million by 2013, accounting for 12% of the overallwireless user base. By 2013, 3G service revenues are expected to generate $15.8 billion,accounting for a share of 46% in overall wireless service revenue. Due to the 52% contributionmade by the replacement market, annual sales of 3G devices are projected to reach 81.3 millionby 2013.

There will also be an increase in the share of non-voice services, including data card access, andshort messaging service. The Average Revenue Per User (ARPU) from these services will risefrom the present 9% to nearly 23%.

3G would be initially deployed as a voice technology. The ARPU is not expected to risesignificantly in the initial years. The overall impact on ARPU will be determined bypricing/bundling strategies that operators adopt. In some markets, where 3G services havealready been provided, operators have adopted a penetration pricing strategy, aimed at building astrong base of 3G users by pricing 3G services attractively.

Indian mobile operators already generate significant revenues from non-SMS data services and3G will see new, exciting data services available to the Indian public. Its worth noting that Indiaalready has a dynamic mobile content industry.

However, some experts think that apart from data cards, there are no other killer applications inmobile data services. In the enterprise, e-mail may be a major driver for this market. As far asretail is concerned, video streaming could be a driver. This depends upon the pricing of videoclips and the download speeds that 3G can guarantee. 3G services are at a nascent phase withonly state owned companies offering 3G services in limited pocketsso real price cuts cannotbe seen

Getting subscribers on the 3G bandwagonIn urban regions, telecom carriers are facing declining service quality and decreasing marginsper minute. With 9% of the subscribers contributing 45% of carriers margins and 29% ofrevenues, 3G will certainly enable the carriers to transfer high ARPU customers to thecongestion-free 3G network.

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A combination of better services, innovative applications, and smart handset bundling coupledwith right pricing can attract a large base of users to 3G. Besides, many Indian customers alreadyhave 3G-enabled devices. These people will be the first movers.

In order for the customers to know and get the feel of 3G, MTNL is initially offering a trial pack

for 15 days. The customer can get a first hand feel of exactly what 3G is all about. They canexperience the service, and MTNL is sure that after getting the feel of the same the customerswould not like to go back to 2/2.5G data services.

To improve overall service experience, operators will need to allocate spectrum for 3G toprovide improved voice services. However, this is unlikely to impact the ability to provide richerVAS services. The eventual cost of deploying 3G networks may deter operators from rolling out3G networks to the entire existing customer base, meaning that some segments will not haveimmediate access to 3G. The cost of deploying the networks may impact the pricing strategiesfor service packages offered to the market, with operators adopting different strategies to attractnew subscribers and cover their investment costs

Future of 3G

The good news for mobile users is that now 3G has been uploaded in all the latest handsets fromthe leading manufacturers including Sony Ericsson, Samsung, LG, Nokia and Motorola. Inaddition, a new technology called HSDPA has been upgraded with the 3G system which worksfaster than 3G. The latest gadgets are well-equipped with power-packed features, enabling you tocommunicate and enjoy loads of fun.

Today 2G is booming, one of the big reasons is the low-priced handsets. This, however, is notthe case with 3G. Opportunities are big, but we will have to make it happen.

The success of 3G will depend on innovative business models. The most certainly needed thingis favorable regulations in terms of spectrum fees. It is creation and competition that are the twomantras for the success of 3G in India. There is a need for creating an enthusiasm of technologyamong the consumers, and 3G portals need not be the only goal of the operators.

The big challenge set before us is the affordability of the 3G devices. Educating the customer on3G is another challenge. 3G is most certainly going to be exciting, but also challenging. We needthe infrastructural support and the handset, too, would be at an affordable price. The stakeholders

should come together in order to see some good development. There is an opportunity totransform the society, which is possible as long as all of us can work together.

One of the advantages of 3G network is that it would give better voice clarity. It will shift theInternet largely to the mobile space and we can ensure a 3G success

A matter of concern before us is the kind of bidding that would take place. It is equallychallenging to attract consumers to 3G. The reason why ARPUs are on the decline is because the

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consumers are not able to see value for money. We need to concentrate more on customers. Aproper working strategy will lead to the success of 3G services.

Which companies have applied for 3G license?

3G spectrums has been provided to GSM players like BSNL, MTNL, Bharti, and Vodafone andsome international companies have also shown interest to carry out an interface check on a non-commercial basis ahead of the start of 3G mobile services.

Apart from PSU majors, spectrum for carrying out 3G trials has been given to all those who haveapplied under the National Frequency Allocation Plan on the 2.1 GHz band. GSM playersoperate on 900 MHz and 1,800 MHz, while CDMA players operate on 800 MHz.

What is the pricing issue in India?

While Tatas have welcomed Trais Rs 1,400-crore (Rs 14 billion) base price for a nationwiderollout of 3G services, the rest of the players find the price too exorbitant.

Bharti-Airtel is disappointed with the pricing as they were expecting it to be Rs 300-400 crore(Rs 3-4 billion). The reserve price is a disincentive for telecom companies in India. Bharti hasappealed to lower the prices especially for rural penetration.

What about the security in a 3G network?

3G networks offer a greater degree of security than 2G predecessors. By allowing the UE toauthenticate the network it is attaching to, the user can be sure the network is the intended one

and not an impersonator. 3G networks use the KASUMI block crypto instead of the older A5/1stream cipher. However, a number of serious weaknesses in the KASUMI cipher have beenidentified.

In addition to the 3G network infrastructure security, end to end security is offered whenapplication frameworks such as IMS are accessed, although this is not strictly a 3G property.

Where was 3G spectrum first introduced?

Japan was the first country to introduce 3G on a large commercial scale. In 2005, about 40 percent of subscribers used only 3G networks. It is expected that during 2006 the subscribers would

move from 2G to 3G and upgrade to the next 3.5 G level.

The success of 3G in Japan also shows that video telephony was the killer application for 3Gnetworks. Downloading music was the biggest draw in 3G services.

There are about 60 3G networks across 25 countries.

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For infrastructure providers 3G will be a value-add during slowdown, as they would get to put ina lot of new developments. Layout of next generation networks that are 3G compatible will helpin better manageability of services over the networks. Even service providers believe that 3Gwould make the entire mobility space much more accessible. The broadband connection, as theyhave not reached the set target, will also benefit with 3G coming to India.

3G will help service providers manage their existing infrastructure better and remain competitivein a mobile number portability (MNP) regime. It will also generate a more addressable market tothe GSM service providers. They can go back to their existing customer base and provide themwith enhanced data services

3G will not only make its presence felt in cities and towns but also bring in better and fasternetworks to rural India.

In the years to come 3G would make a lot of difference in making business models moreinnovative. 3G and WiMax will help solve the problem of low broadband penetration in India to

a great extent. It is high time the government realizes the need and use of 3G. In a fast growingeconomy these technologies have the power to change the development roadmap of the country.

CHALLENGES

Weakness in current telecom sector (the recent case of 2G scam)

Limitations due to laws of TRAI

Lack of basic and Secondary infrastructure

Poor distribution network

Economies of scale

1. Differentiation

2. Difference between urban and rural customer

Critical Success Factors

Location

Merchandise

Knowledge and Information

Customer Satisfaction

Ability to Acquire the Right Products

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Product Presentation / Placement

Traffic Building

Layout

Looking Ahead..

BSNL and MTNL are very differently placed in comparison to other private players. It is notyet known when 3G auctions will happen and which companies will be in the spectrum run.With a huge amount of investment only to acquire license, a lot of other costs would beinvolved when it comes to network building and implementation.

But the high costs will lead to new services making its way into the market, especially the urbanareas. Unlike 2G, in 3G one has to come up with very innovative applications and tariff plans.

The penetration level of 3G, however, is still uncertain. The new technology comes with costsattached, and while the upper-middle class business professionals might be able to utilize theseservices, a major part of our population is still far from the levels of affordability that theseservices ask for.

With a per capita income (national average) of as low as $950 per annum (Rs 38,000approximately), access to these technologies shall remain for the select few. Rs 8,000, theminimum amount required for purchasing a 3G handset, is a luxury that most can't afford. Also,other gadgets such as laptops, which can use 3G-run broadband access, are yet to make inroadsamong the large population.

Even as most handset manufacturers see a tremendous growth opportunity in the realm of 3G-enabled mobiles, it is certain that price will play a key role in deciding the fate of the newtechnology. To tackle this concern, mobile phone manufacturers are making efforts to come upwith phones as cheap as Rs 3,500, against the currently available minimum price of over Rs8,000. Mobile makers in India are also expecting prices to dip, and thus are contemplatingaggressive plans to come up with affordable handsets in this category.

Analysts say that 3G first needs to be popular with the middle class segment if it is to bring themuch talked about broadband revolution. For such kind of change to take place, the price ofthe handset and the services will play a crucial role.

About 15-20% mobile phones in India are already 3G-enabled, but they have to be madeaffordable. The availability of reasonably priced phones has already made many experts reworktheir estimates of the size of the 3G market to grow from the present 40-70 mn to 100-150 mn by2012.

3G is one of the most cost effective ways to deliver mobile broadband to the masses. Expectedly3G can single-handedly achieve far more in terms of bridging the digital divide than any other

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way of mobile internet connection introduced by the government.

Because of its higher voice capacity, 3G could also facilitate the delivery of far more cost-effective voice services. However, this will happen only if operators do not have to pay

exorbitant prices for 3G spectrum. An auction of 3G spectrum could lead to irresponsiblebidding resulting in high costs and tariffs, which would completely negate the tremendouscapacity advantage that 3G has to offer.

Auctions also have another downside - by their very nature, they entail a selection amongstbidders, which would result in discrimination between existing cellular operators as it woulddeny some operators their legitimate expectation of evolving to 3G. Also, it would not be in thenational interest if the 3G policy ended up being disruptive, creating uncertainties, leaving thesurvivors with the winners' curse and others with the prospect of gradual collapse of businesses.

Therefore, the answer to the question raised is that, yes, 3G has a future in India and that it is

relevant and important, but the key to the success of 3G will lie in its price, that is, if it has tobecome a mass service. 3G did not take off in the west because of the exorbitant prices attachedto its spectrum, which made the service unaffordable and restricted to a niche market.

The 3G service can also help to alleviate the severe spectrum crunch that is currently beingexperienced by various operators, especially those in the big cities and metros. There simply isnot enough 2G spectrum that can fuel the aggressive growth in services.

Also the 3G spectrum has a voice capacity that is four-five times higher than the 2G spectrum.This could actually play a crucial role in helping to overcome the limited availability of the 2G

spectrum. It may be helpful in achieving a national telecom target of 250 million by 2009 and500 million by 2010.

3G networks enable network operators to offer users a wider range of more advanced serviceswhile achieving greater network capacity through improved spectral efficiency.

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Project Introduction

Indian Telecom industry is going through a transition phase. Most of the Serviceprovider in our country who earlier provided the 2G services now going to Provide3G services.. Though Telecom sector in India is undergoing an exponential growth,the road ahead is full of challenges.

India telecom industry is the largest industry in India, with an employment of

around 8% and contributing to over 10% of the country's GDP. Retail industry inIndia is expected to rise 25% yearly being driven by the services which is going torolled out in upcoming months.

This project will evaluate the future prospects of 3G services in India. Andcomparison us done between the three big telecom organization or we can say theservice providers (Airtel, Relaince and Bsnl) regarding the 3G services.

Objectives

To study the future prospects of 3G services in India

Challenges & opportunities

Impact of big players on small players

Impact of foreign players

Role of Government

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Limitations of the study

For collecting data commutation cost will be incurred

Frequent changes in the market trend and customer preferences

The scope of study is limitedto sample size of 200

Our observation is confined to New Delhi and Chandigarh only

The data which will be collected from customers and telecom retailers is

through questionnaires and is subject to response errors

Research Methodology

Primary Data Collection for Customers and Retail Outlets

Descriptive Research Design:

The research design adopted in this study is Descriptive Research Design. A

descriptive research design is the one which is description of the state of affairs as

it exists at present. It includes survey and fact finding enquiries of different kinds.

The researcher has no control over the variables. The researcher used this research

design to describe the consumer buying behavior and the retailers outlook towards

changing trends in Indian Food Retailing and their future perceptions.

For Customers: This research design is used to find out the respondents attitude

and their customer satisfaction level.

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For Retail Outlets: This research design is used to find out the comparative study of

competitive Retail Outlets which are being preferred by the respondents.

Sampling Design: A sample design is a definite plan for obtaining a sample from a

given population. It refers to the techniques or procedures the researcher would

adopt in selecting items for the sample.

Convenience Sampling:

The researcher adopted convenience sampling. It is the non probability sampling in

which sampling procedures does not have any basis for estimating the probability

that each item in the population is included in the sample. The researcher selects

the people according to their convenience.

For Customers: For selecting respondents, random sampling was used, due to

factors like convenience and for each market there was a set quota of 25

respondents.

For Retail Outlets:For selecting respondents, random sampling was used, due to

factors like convenience and for each market there was a set quota of 5 outlets.

Sample Size:

For Customers: The target sample for this study is 200 respondents in various

areas of Mohali and Chandigarh that was done independently and they are further

divided into age group of 20-60 including business class, service class, students and

house wives.

For Retail Outlets:The target sample for this project is 5 Competitive Brands and

further 3 Outlets of each competitive Retail Brands in various areas of Chandigarh

and New Delhi that was done independently.

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Sampling Area:

The sampling unit may be a Geographical one such as state, District, Village etc.

The geographical sampling unit under study has covered the area of Ludhiana and

Chandigarh. The various locations where survey was conducted include:

For Customers:

New Delhi:Mainly eating joints and food courts of various shopping malls like also

covering various food retail outlets

Chandigarh: Mainly eating joints and food courts of various markets like Sector 17,

Sector 35, Sector 22 and Centra Mall also covering various food retail outlets

For Retail Outlets:

For New Delhi:Mainly outlets in various shopping malls

For Chandigarh: Mainly outlets in various markets like Sector 17, 3B2, 7 Phase

Mohali

Secondary Data: As far as the secondary data is concerned, data was taken from

various websites, journals, industry database and annual reports.

harsh vardhan kaushik (09bs0000850) intrim report

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