Quality Management Practices in the Growing Telecom Industry – AnIndustrial Insight

Nadeem KureshiCenter for Advanced Studies in Engineering, Islamabad, Pakistan.nadeemk@msu.eduAhmad SajjadAir University, Islamabad, Pakistan.sajjads5@yahoo.com AbstractQuality Management has made significant inroads into Telecom industry worldwide.Initiatives like TL 9000 Telecom Quality Management System aim to provide “aconsistent set of quality expectations to drive efficiency and performance” in telecomindustry worldwide. Companies are adopting various quality tools in this sector andeven the latest Quality Management initiatives like Six Sigma are being used.

Telecom industry is however in its growing stage and reliable data on adoption of Quality Management in this industry, particularly in developing economies, has not been drawn up. An extensive literature review has been done to explore the contributions addressinginitiatives and issues in Quality Management in Telecom businesses. In parallel,Telecom business firms in Pakistan are investigated for their current and planned Quality Management Initiatives, including TL 9000. The primary and expected outcomes of current and planned Quality Management programs and initiatives havealso been explored.Telecom Industry in developing economies is attracting huge FDI (Foreign Direct Investment) in Pakistan and India, and in other developing countries; and the trend is expected to continue. The result of this study will contribute towards:

•

Decision making knowledge required by current and potential investors.

•

Provision of Industrial insight for practitioner and researchers worldwide.

•

Addition to Sector Specific Quality Management Body of Knowledge.

Keywords

Telecom Business Management, TL-9000, Quality Management, Developingeconomies, FDI.

Introduction

Pakistan’s telecom sector has registered unprecedented population adjusted growth in the last fewyears. With huge revenue generation for operators, huge FDI in this sector and large scale job

generation, this has created a very competitive environment; the outcome for which is an industry-wide focus on Quality of Service and quality practices.

Growth in Pakistan’s telecom sector

Pakistan has witnessed one of the fastest and largest telecom sector population adjusted growth in theworld over the last 7 years. Pakistan’s telecom industry has attracted a net Foreign Direct Investment(FDI) of approximately 6.6 billion US dollars in the period 2001-2008 (Economic Survey of Pakistan,2007-08). The sector has witnessed a 27.3% growth in Reinvested Earnings in FDI in last financialyear. The telecom sector has reported generation of 400,000 indirect jobs from the telecom sector.(Samarajiva & Lokanathan, 2006) The cellular industry of Pakistan has shown an exceptional annualgrowth of 119 percent during 2000-07 in terms of subscribers. An average addition of more than twomillion subscribers in a month has been seen in this sector over the last 2 years.The mobile tele-density of about 50 percent is the prime contributor to the overall tele-density of around 54 percent in Pakistan. Acquisition of Paktel (89 percent shares) by China Mobile (CM Pak)at enterprise value (EV) of 460 m US Dollars, and Warid Tel (30 percent share) by SingaporeTelecommunications Ltd (SingTel) for EV of 2.9 b US Dollars speaks volumes of investors interest inthe sector. (BJ; 2008)

Comparison with regional economies

Mobile Penetration and Subscriber CAGR

compares very favorably to economies in the region:

Thailand

Penetration CAGR = 53.2% S

ubscriber CAGR = 54.7%

Philippines

Penetration CAGR =68.8% S

ubscriber CAGR =72%

Indonesia

Penetration CAGR = 66%

Subscriber CAGR =66.8%

Pakistan

Penetration CAGR =109%

Subscriber CAGR =120%

Sri Lanka

Penetration CAGR = 50.8% Subscriber CAGR =52%

India

Penetration CAGR = 87.8%

Subscriber CAGR =90.6%

Table 1.

Penetration and SubscriptionWhile there is an intensified competition is witnessed in the sector, innovative product and servicescoupled with and advanced technologies, there is still a huge potential for growth in this sector, andthere is a widespread understanding among operators that

Quality in telecom

The definition of “quality”, in the fledgling telecom industry in Pakistan, is at best obscure. Quality isoften defined imprecisely in textbooks (Allen 2006) in terms of a subjectively assessed performancelevel (P) of the unit in question and the expectations (E) that customers have for that unit. A roughformula for quality (Allen 2006) (Q) is:

PQ E

(1)Often, quality is considered in the context of many smaller parts of a larger service, such as the clarityof voice, connectivity, courtesy of operators etc, and the key issue is, why some fail to perform up toexpectation and others succeed.

Compound Annual Growth Rate

(CAGR) is a business and

investing specific term for the geometric mean growth rate on anannualized basis.Where, V(t_0) = start value, V(t_n) = finish value, and t_n - t_0 =number of years.

The terms TQM and Business Improvement have been used interchangeably in contemporaryliterature. McAdam (2000), in his seminal work aimed at clarifying the connotations of practical useof the terms TQM, Organizational Excellence and Business Improvement has concluded that theterminologies associated with TQM have been found to be synonymous to those used for BusinessImprovement. The framework shown in figure 1 has been used for the purpose.

Figure 1.

McAdam Framework for clarifying Quality terminologiesSimilarly Taylor and McAdam (2003) have observed that Business Improvement (BI) tools andtechniques “have their roots in improving quality and the maintenance of quality systems”.

Defining and Measuring quality in Telecom Sector

How do we distinguish the telecom organizations’ Quality? Quality, in its final analysis, is thecapacity to meet diverse requirements − productive, economical, social − with “concrete andmeasurable actions”. The Quality of performances is a basic element to differentiate an organizationwithin the market. (Franceschini et al., 2007)Customer relationships Establishing strong relationships with customers thru

partnership arrangements, direct customer contacts andintegration of the plant’s operations with customersCustomer involvement in new productdesign/introductionInvolvement of customers in the new productdesign/introduction processCollection of information on customerneedsThe collection of information on customer needs viafrequent and close interaction with customers, includingforward looking information, information on the

importance placed by existing customers on severalrequirements etcDissemination of customer needs withinthe organization and responsiveness to thatinformationThe existence of mechanisms within the organization todisseminate and respond to information on customerneeds