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Dr. D.Y. Patil University in partial fulfillment of the requirements for the award of the Degree of MASTERS IN BUSINESS ADMINISTRATION Submitted by: Venugopal Arravelli N (Roll No.MBA-IB-0801035)
Research Guide: Mrs.Surya Bhamre Department of Business Management Padmashree Dr. D.Y. Patil University CBD Belapur, Navi Mumbai 2008-2010 DECLARATION I hereby declare that the dissertation “consumer behavior study while buying new mobile connections” submitted for the MBA Degree at Padmashree Dr. D.Y. Patil U niversity’s Department of Business Management is my original work and the disser tation has not formed the basis for the award of any degree, associate ship, fel lowship or any other similar titles. Place: Mumbai Date: (_________________) Signature of the Student
Certificate This is to certify that the dissertation entitled “CONSUMER BEHAVIOR STUDY WHIL E BUYING NEW MOBILE CONNECTIONS” is the bona fide research work carried out by M r. Venugopal Arravelli N. student of MBA, at Padmashree Dr. D.Y. Patil Universit y’s Department of Business Management during the year 2008-2010, in partial fulf illment of the requirements for the award of the Degree of Master in Business Ma nagement and that the dissertation has not formed the basis for the award previo usly of any degree, diploma, associate ship, fellowship or any other similar tit le.
______________________ (Mrs Surya Bhamre)
__________________ (Dr. R. Gopal,) Director, Department of Business Mgt, Padmashree Dr. D.Y. Patil University)
Place: Mumbai Date:
ACKNOWLEDGEMENTS In the first place, I thank Mrs Surya Bhamre , Lecturer, Department of Business Management, Padmashree Dr. D.Y. Patil University, Navi Mumbai for having given m e her valuable guidance for the project. Without her help it would have been imp ossible for me to complete the project. I would also like to thank the various people from the service industry who have provided me with a lot of information and in fact even sharing some of the conf idential company documents and data – many of which I have used in this report a nd without which this project could not have been completed. I would be failing in my duty if I do not acknowledge with a deep sense of grati tude the sacrifices made by my parents and thus have helped me in completing the project work successfully. Place: Mumbai Date: Signature of the student. CONTENTS Chapter No A B C 1 2 2.1 2.2 3 3.1 3.2 4 5 6 7 7.1 22 7.2 7.3 Title Page No List of Tables 15 List of Figures 16 List of Abbreviations Executive Summary 1 Objective of the Study 2 Need of the study 3 Scope of the study 5 Research Methodology 6 Statement of the problem 9 Limitation of the study 10 Review of Literature 11 Tata company profile 13 About Tata Teleservice 18 Introduction Consumer buying behavior while buying new mobile connection Factors effecting Consumer Buying behavior Consumer Buying Decision Process 24
27 8 India 9 10 11 12 13 14 Analysis Of Mobile Communication Spread And Its Implications In 32 Future mobile communication in india Details about service providers Data Analysis and interpretation Suggestions 81 Conclusion 83 ANNEXURE 85 QUESTIONAIRE BIBLIOGRAPHY 91 ARTICLES 145 38 39 52
CONSUMER BEHAVIOR STUDY WHILE BUYING NEW MOBILE CONNECTIONS
“CONSUMER BEHAVIOR STUDY WHILE BUYING NEW MOBILE CONNECTIONS”WITH RESPECT TO TAT A INDICOM Dissertation Submitted to the Padmashree Dr. D.Y. Patil University
In order to analyze the subject minutely the topic is being divided into three parts. First part of my project is all about designing a suitable questionna ire so that the various variable factors that the consumer behavior and their ef fectiveness in molding the same can be studied.MBA-IB-0801035) Research Guide: Mrs.Surya Bhamre Department of Business Management Padmashree Dr. Patil University CBD Belapur. a conclusion will be drawn ther eafter which will stand as an ultimate result of my study in the concerned field so called “CONSUMER BEHAVIOR STUDY WHILE BUYING NEW MOBILE CONNECTIONS” The services structure can be renewed based on the provide suggestions and recom mendations which can help to increase the client base and increase the market sh are in the concerned field as the findings will basically revolve around the mos t favored services by the investors and locate the core areas where the services can be improved further according to the market demand. Well in the last part of my study is d evoted on doing the analysis and interpretation from the feedback collected from the respondents.in partial fulfillment of the requirements for the award of the Degree of MASTERS IN BUSINESS ADMINISTRATION Submitted by: Venugopal Arravelli N (Roll No. Navi Mumbai 2008-2010 EXECUTIVE SUMMARY Consumer behavior during taking new mobile connections is a vast topic to study. Then application of suitable statistical tool is decided on to arrive at some results. The next part is dedicated to se lection a suitable sample size of consumers using mobile connections and taking their feedback through the questionnaire. To ascertain the attributes which influenced the customer’s in selecting a pa rticular cell phone services provider. OBJECTIVE OF THE STUDY: 1. .Y. D. Based on these results.
Cellular service providers emerge as a boon quench such a thirst. In the mo dern world an individual tends to communicate anything to everything right from the place where he/she stands. one competitor tries to p enetrate through the loop holes of the other competitor. it is important to st udy the various attributes or factors which shape the consumers mind during taki ng or switching over to new mobile connections. introduce varieties of handsets. To assess the general problems faced by the cellular service users. To offer valuable suggestions to improve the customer base of Tata Indicom. whether the prod ucts & services are competent enough to fight back their competitor’s products & services or not . In terms of value. Hence in this context. models a healthy competi tion that benefits the subscribers. in order to stay alive in the market place.addition to t he organization. 3. NEED OF THE STUDY: Exchange of information becomes the necessity of life to a common man. add new features to existing ones. out of order. Day by day m any new competitors enter the market with new attractive schemes. provide additi onal facilities. As.2. To study the consumer’s satisfaction towards different cellular service provi ders. This project will visua lize all sorts of loop holes which the Tata Indicom possesses right now and will also give a complete insight to all types of problems such as. thus by provid ing facilities. 4. Though the telecom industry h as its origin in the recent past and the growth has been excellent. In this situation. this study will definitely help the Company to grow in future. we all are aware of the fact that a fierce competition is going on. without an y disturbance like line crossing. etc . which a common man cannot imagine. Even while riding a vehicle he / she wants to com municate within a fraction of second at quick speed with clear voice. reduce the charges of incomi ng and outgoing calls. most of which lack in the connectivity given by the department of telecommunication.
MTS. T ata Indicom and other cell phone service rendered to the customers. not only the research methods are but also consider th e logic behind the methods. He can report what has happened? Or what is happening? Nature of data: . Vodafone and Reliance Comm. Research methods: Those methods which are used by the researcher during the course of studying are research problem are termed as research methods. Descriptive research design: In includes surveys. TataDoco mo. Loop. The major pu rpose of descriptive research is description of state of affairs as it exists at present. Research methodology: The research methodology. Idea. and facts finding enquires of different kinds. Aircel. MTNL.Airtel. virgin. RESEARCH METHODOLOGY – Research is a systematic effort to gain new knowledge. They are in the contest of our research studied. In Mumbai t here are 11 cellular services available . The main character of this method is that the researcher has no contro l over the variables. And explain why we are using a particular method or techniques and we are not using others. Research is a movement of knowledge from known to unknown from the available pla ce to the required place. The main objective s of this study is to analyze the customer behavior during taking new mobile con nections and consumers of different cellular service providers of Mumbai city h as been taken for the current research work. Tata Indicom.SCOPE OF THIS STUDY: The present study is contained to Mumbai and it is decided to consider Airtel.
There are various cellular service services providers in our country and they are playing an essential role in fulfilling the needs of the customers.This study covers Mumbai city only. barcharts. I have used hypothesis-test for analyzing the data and arriving at the conclusion . Hence the development of cellular industry mainly depends on the customer satisfaction.The sample size covered for the purpose of this study is 30 DEVELOPING THE QUESTIONNAIRE: The following four questions need to be answered in designing an effective set o f questions or a questionnaire: 1) Will the respondent have the information/knowledge needed to answer the que stions? 2) Will the respondent understand the questions? 3) Will the respondent likely to give a true answer? 4) Will the formulation of the question bias the response Basically in the beginning some sample questionnaires were developed and where a dministered directly on the clients. Now-a-d ays. needs and preference can be ch anging as per current scenario. This was the trail method included for pilo t testing and the final questionnaires were prepared thereafter assessing the fe edback and result of the test. Their taste. percentages. as compared to the industrially advanced countries. It is for the fact that the economy of our country has been in the developing stag e. the customers are more dynamic. Area of the study. Statement of problem: In our country the growth of service marketing especially telecom industry is st ill in its infancy stage. Sample size . Does the cell industry satisfy the social responsibility? . However the follo wing questions may arise regarding customer satisfaction 1. Tools for analysis: Along with the usual statistical tools such as tables.Primary data – Interviews Questionnaires Personal observations Secondary data – Journals Reports Books Websites Collection of data: The data were collected from the respondents through the distribution of questio nnaire.
P. • As per the population of the study is huge. Sree Nandhini. A reference to these entire studies wil l be related in the context of the shaping the present study. The researcher would gain good background knowledge of t he problem by reviewing certain studies. the results may not be appl icable to other areas. 2. Whether the service provided by cell phone industry is satisfying the custome rs? 4. • Lack of awareness about the Company’s products & services among the customers may hamper the primary data collection. • Information provided by the customers may not be accurate. an unpublished M. Samuel. . 4. development. Are the facilities available adequate to satisfy the customers? Limitations of the study Though the detailed investigation is made in the present study. an unpublished submitted to Bharathiar University. Dis sertation. REVIEW OF LITERATURE A brief literature would be of immense help to the researcher in gaining insight into selected problem. technology.Phil. They may hide some of the information at the time of filling up the questionnaires. a study with a referenc e to BPL and Aircel mobile connections and services”. December 2002. in her study shows that attitude of the respondents using cell connections was not influenced by either education or occupation and income. What are the expectations by the customer’s regarding service provided by the cell phone service provider? 3. 3. etc. fashion. “an investigation of user perception and altitude to cellular phone in Coimbatore”. still there are following limitations.2. Hutchison’s managing director Asin Ghosh 2005 says in the article. a sample size of 30 sample respond ents is only covered till now. Coimbatore. So. 1. Decembe r. “customer satisfaction for cellular services. 2001. 5. • Data collection of exact data for the research is not possible because there i s a gap between what respondent say and what they actually do. • This study is based on the prevailing customer’s satisfaction. Adhavan (2003). in his study “existing customer relation” found that the d ealer’s service regarding Aircel cellular is highly satisfactory. submitted to Bharathiar University. • This study is restricted only to them Mumbai . But the custome r’s satisfaction may change according to time. Sree Nandhini.
After the death of Dorab Tata in 1 934. the eldest son of Jamsetji became the chairman of the group after hi s fathers death in 1904. “telecommunication” business world 27th January 2003. He was succeeded by JRD Tata .“Telecommunication” telecommunication is such a huge sector and it is so easy to be reduced by its different points. Tata Chemicals has the l . auto-componen t manufacturing • Tata Motors (formerly Tata Engineering and Locomotives Company Ltd (TELC O)). manufacturer of commercial vehicles (largest in India) and passenger cars • Jaguar and Land Rover • Tata Projects • Tata Consulting Engineers Limited • Telco Construction Equipment Company • TRF Bulk Material Handling Equipment & Systems and Port & Yard Equipment s. Tata Consultancy Services (1968) and Titan Industries (1984). when Jamsetji Nusse rwanji Tata established a trading company dealing in Opium in Bombay present it is calling as Mumbai. The group expanded significantly under him with the establishment of Tata Chem icals (1939). Voltas (1954).consumer behavior in Indian perpertive –edited by suja nair –Himalaya publicat ions 10. Nowroji Saklatwala headed the group till 1938. the group ventured into steel production (19 05) and hydroelectric power generation(1910).best coney 9. • Voltas. It supp lies power to Mumbai. India. the commercial capital of India and parts of New Delhi. Taj Mahal Hotel in Bombay was opened for business in 1903.consumer satisfaction concept – edited by walker TATA COMPANY PROFILE History The beginnings of the Tata Group can be traced back to 1868. Tata T ea (1962). Consumer behavior – consumer psychology while buying products edited by leon schiffman 8. the incumbent chairman of the group succeeded JRD Tata in 1991 Engineering • TAL Manufacturing Solutions exports titanium-composite floor beams that are installed in the Boeing 787 aircraft. consumer behavior model – edited by Hawkins . Sir Dorab Tata. Chemicals • Rallis India • Tata Pigments • Tata Chemicals. but thankfully we were” 6. • Tata AutoComp Systems Limited (TACO) and its subsidiaries. Tata Motors and Tata Industries (both 1945). This was followed by the installation of Empress Mills in Nagpur in 1877. Under him. consumer electronics company • Voltas Global Engineering Centre Energy • Tata Power is one of the largest private sector power companies. 7. headquartered in Mumbai. Asin Glosh. Ratan T ata.
Based in Bangalore and Trivandrum. (THDC) • Tata-AIG General Insurance. the Indian telecom giant. formerly VSNL. a United Kingdom-based chemical company with operat ions in Kenya and the Netherlands. • Tata Services Consumer Products • Tata Salt. • Advinus Therapeutics. a joint venture with AIG • Tata-AIG Life Insurance. (TCS) is Asia s largest software company with 2008-09 revenues being over US$ 6 bn. Tata-owned VSNL acquired Teleglobe in 2005. It also owns the Tetley brand of tea sold primarily in Eur ope. Since 2006 Tata Chemi cals has owned Brunner Mond.argest single soda ash production capacity plant in India. Tata Salt Lite • Tata Ceramics • Infiniti Retail • Tata Tea Limited is the world s second largest manufacturer of packaged tea and tea products. CMC Limited . a joint venture with AIG • Tata Advanced Systems Limited • Tata Asset Management • Tata Financial Services • Tata Capital • Tata Investment Corporation • Tata Quality Management Services • Tata Share Registry • Tata Strategic Management Group (TSMG) is one of the largest consulting firms in South Asia. One of the leading companies in the animation industry of India. Indian. Agro and Biotech industries. Services • The Indian Hotels Company • Tata Housing Development Company Ltd. • Tata Elxsi is another Software and Industrial design company of the Tata stable. a Contract res earch organization focused on drug discovery and development for Pharmaceutical. • Titan Industries manufacturers of Titan watches • Sonata Watches A watch product by TATA • Trent (Westside) • Tata Sky • Tata International Ltd . headquartered in Bangalore.Leather Products Division • Tanishq jewellery • Star Bazaar Information systems and communications • Computational Research Laboratories • INCAT • Nelco • Nelito Systems • Tata Business Support Services (formerly Serwizsol) • Tata Consultancy Services Ltd. i-Shakti Salt. • Tata Interactive Systems • Tata Technologies Limited • Tata Teleservices • Tatanet • Tata Communications. was acquir ed in 2002.
000 employees and more than 3. Calling Cards.000 Crores (US$ 7. which provides services in the Mumbai and R est of Maharashtra telecom circles. Wi-Fi and Broadband Value Added Services: Mobile and Broadband Content/Applications. 2 million shareholders. 5 billion) in Telecom (FY 2006). Having pioneered the CDMA 2000 technology platform in India. 2. Dial-up Interne t. Tata Teleservices h as established a 3G-ready robust and reliable telecom infrastructure in partners hip with Motorola. IP/MPLS VPN. the Group has a formidable presence across the telecom value chain. over 3. Tata Teleservices spearheads the Group’s presence in the te lecom sector. Ericsson and Lucent. The Group’s communications activities are currently spread primarily over four companies—Tata Teleservices Limited (TTSL) and its associate Tata Teleservices (Maharashtra) Limited (TTML). the company has swung into expansion mode an d currently has a pan-India state-of-the-art network. 51. Tata Teleservices was the first to launch CD MA mobile services in India with the Andhra Pradesh circle. Together. 30. Managed Data Networks. Beginning with its a cquisition of Hughes Telecom (India) Limited in December 2002 [now renamed Tata Teleservices (Maharashtra) Limited]. and internationally.543 Crores Tata Group that has over 80 companies. Terrestrial Fiber Network and Satellite Earth Stations and VSAT Connecti vity Tata Teleservices is part of the INR Rs. including: Telephony Services: Fixed and Mobile Media and Entertainment Services: Satellite TV Data Services: Leased Lines. Net Telephony and Managed Services Infrastructure Services: Submarine Cable Ban dwidth. these companies cov er the full range of communications services. With a committed investment of INR 36. Incorporated in 1996.ABOUT TATA TELESERVICES Communications is the Tata Group’s largest investment and the Group’s objective is to provide end-to-end telecommunications solutions for business and residenti al customers across the nation. The company has also received the licens . Tata Communication (erstwhile VSNL) and Tata Sky.
handset development and technical support. as it mov es towards a pan-India dual network presence. INTRODUCTION TO CONSUMER BEHAVIOR STUDY WHILE BUYING A NEW MOBILE CONNECTIONS The title of my project is “Consumer Behavior Study while buying a New Mobile Co nnections” first of all we need to understand that “What is consumer buying beha vior?” Before business can develop marketing strategies. where in people are appointed and trained by TTSL – who visit villages on a bicycle or a two-wheele r at defined times on defined days of the week. 3-way conferencing.7 billion. dissem inating information through these centres and using them as local distributors. polyphonic ring tones. selling recharge vouchers and se rvicing equipment. the transactio n is also expected to mark the beginning of a relationship of broader co-operati on between Tata companies and the Nippon Telegraph and Telephone Corporation (NT T). Some of the other products launched by the company include pr epaid wireless desktop connections. face book. TTSL announced that it would provide CDMA mobile services targeted towards the youth. Their behavior result from deeply held values and attitudes. they must understand wh at factors influence buyer’s behavior and how they make purchase decisions to sa tisfy their needs and wants. Tata Kisaan Sansar network. The company joined hands with Tata Chemicals. as part of which th e Japanese company acquired a 26% stake in TTSL for USD 2. Other services include value-added services su ch as voice portal. etc In Feb 2008. in association with the Virgin Group on a Franchisee model ba sis. In November 2008. calling card services and en terprise services. Buyers are moved by a complex set of deep and subtl e emotions. their p erception of the world and their place in it. wireless desktop connections. The transac tion marks a key step in the strategic evolution of Tata Teleservices. M commerce applications. TTSL is on the threshold of emerging as a trueplay dual technology telecom operator. The alliance will also acceler ate Tata Teleservices’ GSM plans and help the company penetrate the market with advanced technology and new VAS offering. Rural Telecom TTSL also maintains a distribution network across villages . 2 slot in terms of Market Share in Delhi NCR region wit h a subscriber base of 5 million. USB Modem. gr oup calling. impulse or just . Wi-Fi Internet. astrology. data cards.e from the Department of Telecommunications to launch GSM services as well. voice portal. post-paid Internet services. crossed the 35 million subscribers mark in the wirel ess category with an overall subscriber base of over 36 million. The potential benefits and synergies from the alliance with DOCOMO cut acros s marketing. Tata Teleservices’ bouquet of telephon y services includes mobile services. interactive applica tions like news. each runner covers between 200 to 300 customers. roaming. Tata Teleservices Provides mobile services under 3 Brand names: • Tata Indicom (CDMA Mobile operator) • Tata DoCoMo (GSM Mobile operator) • Virgin Mobile (CDMA Mobile operator) • Virgin Mobile (GSM Mobile operator) Market Data Tata Indicom in April 2009. With this launch set for early 2009. Tata Teleservices is no. from common sense. Tata Teleservices enter ed into an agreement with Japanese telecom major NTT DOCOMO. all of which are expecte d to create new opportunities for both companies. picture messaging . On a broader level. cricket. public phone booths. new mobile handsets and new voice and data services such as BREW games. public booth telephony and wire line services.
sociology. Became. citizenship etc. Reference groups can be family. attitudes or behavior of group members. So. Personal Factors. These social factors can include culture and subculture. It is therefore no surprise that Peter F Druck er the renowned management Guru. the mark eter satisfies the consumer. Then the core activity of any company is to attract and retain customers. A. Social Factors 2. The income of all commercial enterprise is derived from the payments received for th e products and services supplied to its customers. These include 5 steps which are: problem or need recognition. alternative evaluation. SOCIAL FACTORS Social factors refer to forces that other people exert and which affect consumer s’ purchase behavior. This establishes the needs for and the importance of cus tomer satisfaction. Reference groups serve as one of the primary agents of consumer socialization an d learning and can be influential enough to induce not only socially acceptable consumer behavior but also socially unacceptable and even personal destructive b . FACTORS AFFECTING CONSUMER BUYING BEHAVIOR Consumer buying behavior is influenced by the major three factors: 1. purchasing and post consumption of a pro duct or service. IMPORTANCE OF CONSUMER SATISFACTION The needs to satisfy customer for success in any commercial enterprise is very obvious.plain whimsy. when they buy and why they buy. friends. The satisfaction of consumers is different from one to anoth er. anthropology and economics. Psychological Factors 3. he must very well know the behavior of consumer. Consumer behavior involves study of how people buy. these can influence/ affect the co nsumer buying behavior. Example: By taking into consideration Reference group. purchas e and post-purchase evaluation. Satisfaction of customer is essential for ret ention of customer’s and for continuous sales of the products and services of th e company to customers. work group. r oles and family. Reference group refers to a group with whom an individua l identifies herself/ himself and the extent to which that person assumes many v alues. It also tries to assess the influence on the consumer from groups such as family. There are also several stages through which the consumer exhibit before deciding to purchase goods or services. s chool or college. has said “to satisfy the customers is the missi on and purpose of every business”. If there is no customer there is no income and there is no business. club membership. CONSUMER BUYING BEHAVIOR Consumer behavior refers to the mental and emotional process and the observable behavior of consumers during searching. information search. socio-psyc hology. social class and reference groups. reference groups and society in g eneral. It blends the elements from psychology. what they buy. each consumer has the different behavior in their life. Buyer behavior has two aspects: the final purchase activity visible to a ny observer and the detailed or short decision process that may involve the inte rplay of a number of complex variables not visible to anyone.
Consumer decision making process generally involves five stages-: . For example. according to how an individual r eferences him / her to that particular reference group. For ex ample. he/she wi ll meet different people and form a group. this will influence those customers to buy Sony products due to this attitude towards the brand. This is influenced by demographic factors and personality. Example: Lifestyle is an indicator of how people live and express themselves on the basis of their activities. lifestyle. These factors include demographic factors. perception. for example style of clothing.ehavior. attitude and personality. E. ties and shoes or PD As and less informal clothes like jeans as compared to a Mechanic or Civil engin eer. if fresher student joins a college / university. and opinions. CONSUMER BUYING DECISION PROCESS Consumer buying decision process is the processes undertaken by consumer in rega rd to a potential market transaction before. B. handsets which most of group m ember prefer or even destructive behavior such as excessive consumption of alcoh ol. and situational f actors. use of harmful and addictive drugs etc. A CEO or Manager is likely to buy more formal clothes. Lifestyle dimension provide a bro ader view of people about how they spend their time the importance of things in their surroundings and their beliefs on broad issues associated with life and li ving and themselves. learning. So according to their lifestyle and profession. PERSONAL FACTORS These include those aspects that are unique to a person and influence purchase b ehavior. in that group there can be behavior p atterns of values. consumers of Sony products might have the belief that the products offere d by Sony are durable. the buying behavior of peop le differs from one another. PSYCHOLOGICAL FACTORS These are internal to an individual and generate forces within that influence he r/his purchase behavior. So. Example: Attitude is an enduring organization of motivational. during and after the purchase of a product or service. emotional. interests. this will influence and change his/her buying behavior.g. C. The major forces include motives. Consumer for m attitude towards a brand on the basis of their beliefs about the brand. perceptual and cognitive processes with respect to some aspect of our environment.
. The consumer will decide which product to buy from a set of alternative prod ucts depending on each unique feature that the product offers and the benefit he / she can get out of that feature. This is the vital stage in buying decision process. There are several situations that can cause problem recognition. Smartphone or c lassic phone. a consumer w ill try to solve the problem by asking a friend or goes to the market to seek ad vice for which product will best serve his need. In this process of information collection it will yield awareness of set of brands of mobile connections she can buy. Product fea tures and its benefit is what influence consumer to prefer that particular produ ct. t hese include: • • • • • Depletion of stock Dissatisfaction with goods in stock Environmental Changes Change in Financial Situation Marketer Initiated Activities Stage I: It’s when a person recognizes that she/he cannot make a call from her mobile pho ne that’s when she/he recognizes that her phone has been damaged i.e. characterist ics and benefits that a consumer desires to solve a certain problem. an individual would not seek to buy good s or service. STAGE III : When that user got enough information concerning the different brand s of mobile connections available in the market. First he will recall how he used to solve such kind of a pro blem in the past. he / she will try to find the means to solve that need. Secondly. this is called nominal decision making. if they also cannot repair it then she will try to find which mobile phone is good and that can serve her need.Problem Recognition Purchase decision making process begins when a buyer becomes aware of an unsatis fied need or problem. Information Search After the consumer has recognized the need. either a mobile for multimedia and entertainment. If she cannot re pair it herself she will ask a friend to help out. Sources of information include: • Personal sources • Commercial Sources • Public sources • Personal experience STAGE II: The user of the phone after recognizing that her phone is damaged. becaus e without recognizing the need or want. sh e will eventually try to find out how she can repair her phone. if the friend cannot solve th e problem she will go to mobile repair shop. the phone has hardware problems and needs to be repaired or buying a new piece. this is called limited decision making. features. she will decide which kind of a mobile phone and brand she’s going to buy depending upon her need for that part icular mobile. Alternatives evaluation Consumers’ evaluates criteria refer to various dimension.
If she will find that her expectation are meeting she will be satisfied. Post-purchase Actions Consumer favorable post-purchase evaluation leads to satisfaction. ANALYSIS OF MOBILE COMMUNICATION SPREAD AND ITS IMPLICATIONS IN INDIA History of Cellular Telephony in India Initially Department of Telecommunications (Dot) was the only monopoly operator in the country. Hence. Ti ll date I have completed the survey of 150 consumers of different cellular servi ce providers and I got many Suggestions & Recommendations from the customers. This can re sult to consumer experiencing post purchase dissatisfaction. otherwise. Under the Gov ernment policy of economic liberalization. she will make a final decision of where to buying that phone and make the final transaction procedures. if she found that t here are more additional features that she did not expect this mobile phone to h ave. STAGE IV: After selecting brand of the phone and model from different alternativ es of mobile connections. I need to do the su rvey of existing/new consumers of the service of different cellular service prov iders. the consumer completes the final step of transaction by either cash or cre dit. Consumer tends to evaluate their wisdom on the purchase of that particular product. Retail outlet image and its location are important. If the consumer’s p erceived performance level is below expectation and fail to meet satisfaction th is will eventually cause dissatisfaction. This might cause t he consumer toinitiate complaint behavior and spread negative word-of-mouth conc erning that particular product. After selecting where to buy and what to buy. Consumer usually pr efers a nearby retail outlet for minor shopping and they can willingly go to a f ar away store when they purchase items which are of higher values and which invo lve higher sensitive purchase decision. Satisfaction with the purchase is basically a function of the initial performance level expec tation and perceived performance relative to those expectations. STAGE V : If she decided to buy a multimedia phone she will try to compare the quality of music it provides and pictures taken if they meet her expectations. she will be dissatisfied.Purchase Action This stage involves selection of brand and the retail outlet to purchase such a product. my project is totally based on comparative analysis of different a ttributes shaping the consumer behavior during taking new mobile connections. and so the brand and/ or the outlet wi ll not be considered by the consumer in the future purchases. Since my title is “Consumer behavior during taking new mobile connections”. Telecommunication sector was recognized by the Government of Ind ia as one of the few basic infrastructure sectors for the country. she will be delighted. privatization and competition in Indi .
private sectors have been allowed to enter the public telecommunication field (where Government was a monopoly). covering all villages and bringing the telecommunication services t o the world standard. in global mobile personal communication by satellite (GMPCS) service. To regulate and settle disputes Telecom Regulatory Authority of Indi a was set up in 1997 and in 1999 National Telecom Policy was announced by the Go vernment of India.The GSM service providers are Bharti. Reliance. and Reliance. a ll telecom services were opened up for private sector participation. Kolkata and Chennai . India’s mobile market is dominated by foreign companies for high end telecom equipments.000) villages. Sony Ericsson. Initially Cellular mobile services were duopoly (i.. All telec om sectors under Dot was handed over to new public Sector Undertaking viz. Figure 1 shows the market share of each service provider in India.e. Mumbai.BPL IS NOW LOOP SOURE:. Aircel . 50. In 1994 license for providing cellular mobile services was granted by the Gove rnment of India for the Metropolitan cites of Delhi. In 1992 telecommunication sector in India wa s liberalized to bridge the gap through government spending and to provide addit ional resources for the nation’s telecom target. Philips.3 Million in the rece .000 (out of 6. covering 450 million people. In 1995. Major Service providers in India Two different technologies are deployed by the mobile operators in India namely GSM and CDMA. the total number of GSM subscriptions in India reached 288. telecom companies are anticipating the number will nearly trebl e in the next two years. the cellular networks a re expected to cover 3. NOTE:-HUTCH IS NOW VODAFONE.COM Market Share of both mobile and wire line Service Providers in India GSM Subscribers As per the data released by the Cellular Operators Association of India (COAI). Sams ung. by 2006. and Motorola are the three important vendors for handsets. Shyam. 07.SCRIBD. MTNL. national and international long distan ce service. handsets. Unrestricte d entry is allowed in the basic services.Vergin and loop. Other vendors wh o have their share in this market are L.G. thereby achieving univer sal service. Nati onal Panasonic. Adding on to this benevolent and ha ppy information. Vodafone . The objective of the reform was making the telecommunications within the reach of all.BSNL covers the entire country except Delhi and Mumbai Metros which are under Mahanagar Telephone Nigam Limited (MTNL).6 million . not more than two cellul ar mobile operators could be licensed in each telecom circle). IDEA.WWW. transmission equipments etc. Nokia.million mark. Mitsubishi. HFCl. fly etc MOBILE SUBSCRIBER STATISTICS Recently. VSAT and Public Mobile Radio Trunked Service (PMRTS). under a fixed lic ense fee. which means over nine in 100 Indians have a phone. Alcatel. while protecting the defense and security needs of the cou ntry. In 1993 the telecom industry got an annual foreign investment of Rs 20. whereas the CDMA service providers are TATA. Siemens. mobile connections in India have crossed the 100. In order to speed up the development of the telecom sector. and Sagem Micromaxx. Spice.a. BSNL. Bhara t Sanchar Nigam Limited (BSNL) which was registered under Company’s Act in 1st O ctober 2005. government opened up 19 more telecom circles and issued mobil e licenses. According to a survey.
. "The country has added 50 million subscribers in India in just two years.000 villages in India. Initially the big telephone companies focused only on urban centers. the COAI has projected that there will be nearly 500 Million GSM subscr ibers in India by the end of the current fiscal year while the figure will cross the 800 Million mark by 2012. now has 100 mill ion subscribers using mobile telephony based on the on the technology and it is expecting to add another 100 million subscribers in the next two years.2% .7 Million GSM subscribers for Reliance Communications. As a result. the CDMA service provider which has recently launched its GSM service s." CDG executive director Perry LaForge said.54 Million. He further added the recently-introduced CDMA mobile broadband solutions are poi sed to have a similar significant impact on increasing broadband penetration in the country. However.a trade association -. The number of mobile users in India surged amid gloomy economic conditions and t his is due to the efforts of companies trying to increase the sales at the end o f the fiscal year. as the Company did not disclose its GSM numbers separately. the overall incr ease for GSM subscribers will reach 13.ntly ended fiscal. And there are over 600. TELECOM IN RURAL INDIA India has an urban population of about 26. The rural populat ion of around 700 million is waiting for its share of economic growth. this mindset is gradually changing with the realizati on that there is equal. mobi le penetration is anticipated to increase to 50% from the current level of 35% b y the end of 2009-10.84 Million new subscribers in March 20 09. Attributing this rapid growth to the availability of affordable devices and low tariffs.5-2. CDMA or Code division multiple acce ss is a popular mobile technology.today said that there are now more than 100 million CDMA subscribers in India. Going forward we expect to add another 100 million subscribers in the next two years. In India operators such as Tata Teleservices. On adding estimat ed 2. But a vast section of the rural sector is still cut off from the benefits of telecom services. which is already the world s second-largest CDMA market. Released in Business Standard. In addition. CDMA reached 50 million subscribers in India twice as fas t as any competing cellular technology. The CDMA Development Group (CDG) -.. with an addition of 10. The industry experts believe that fiscal year 2009-10 will wi tness monthly incremental growth of 14-15 Million subscribers.8% and rural population is about 73. Reliance Communications and Siestema Shyam Telelink offer mobile services based on this technology. CDMA Mobile Subscribers India. which they felt were more profitable. Besides. The figures released were excluding the subscriptions recorded by Reliance Commu nications. if not bigger money in rural areas.
Rest of Tamil Nad u. Aircel was honored by CMAI INFOCOM Nat ional Telecom Award 2009 for. Marketing Campa ign & Marketing Professional of the Year. ABS’ product range includes enterprise solutions such as Multiprot ocol Label Switching Virtual Private Networks (MPLS VPNs). Brand Leadership in Telecom. is an ISO 9000 certified compan y. content provi ders and Government. Mumbai. as of October 31. It is India’s fifth largest GSM mobile service provider with a subscriber base of over 27. South Africa. if road maps are created and implemented properly. Aircel is present in 18 of the total 23 telecom circles (including Andhra Pradesh. Jammu & Kashmir. It is also a category A ISP. Now 2. Karnataka. K olkata. the company plans to become a pan -India operator by 2010. It is also having the largest service in Tamilnadu. Australia and Europe have seen this need and have acted upon t he same by implementing TV on Mobile. Aircel Business Solutions (ABS). DETAILS ABOUT SERVICE PROVIDERS: AIRCEL: Aircel is a mobile phone service provider in India. Uttar Pradesh East.7 million. Chennai. It promises to be a USD 1 billion industry by 2010. 2009. Aircel is a joint venture between Maxis Communications of Malaysia and Apollo Hospital Enterprise Ltd of I ndia. Aircel was honored at the World Bra nd Congress 2009 with three awards. Aircel has won many awards for its services. Uttar Pradesh West) and with licence s secured for the remaining 5 telecom circles. India later allowed for CDMA technology also. ‘Excellence in Marketing of New Telecom Service’. South Korea. operators. India is around the corner for implementat ion of similar technology for the benefit of consumers. Kerala.FUTURE OF MOBILE COMMUNICATION IN INDIA India initially started with GSM technology for mobile communication. Voice over Internet P rotocol (VoIP) and Managed Video Services on wireless platform including WiMAX. It offers both prepaid and p ostpaid GSM cellular phone coverage throughout India. Commercial 3G will be started by March 2007 W ith the dwindling revenues of the operators from the data and voice there is a n eed to look at newer applications to fuel growth of the telcos. Additionally. Himachal Pradesh. Delhi & NCR. Rest of Maharashtra & Goa. Bihar & Jharkhan d.8 % among the GSM operators in the country. Maxis has a 74% stake in Aircel and the remaining 26% is with Apollo Hospi tals. North East. Trials are being conducted for 3G implementation in the four metropolitan cities of India. It has a market share of 12. Assam. As on date.TV on Mobile has emerged as a solid and potent answer to this consumer yearning. ABS is a registered member of WiMAX forum – both in the Indian and Internatio nal Chapters. Rest of West Bengal. Aircel has also obtained permission from Department of Telecommunications (DoT) to provide International Long Distance (I LD) and National Long Distance (NLD) telephony services. . Chi na. BSNL has got license for brin ging 3G into operation. part of Aircel. Orissa. Being a te chnology neutral country.75 G EDGE technologies has been implemented and used.
In January 2010. behind China Mobile and China Unicom. Current Dy.349. India’s largest integrated and the first private telecom services provider with a footprint in all the 23 tele com circles. world leader in financial protection and wealth management .7% for Reliance Communi cations and 17. In India. On the 9th of May. will replace Manoj Kohli and will be the CEO with effective from 1st April. 2010. The Enterprise services provide end-to-end telecom solutions to corporate customers and national & international long distance services to carr iers. The businesses at Bharti Airtel have been str uctured into three individual strategic business units (SBU’s) – Mobile Services .733 GSM mobile connectio ns in India till December 2009. Ltd. Bharti Airtel is the 3rd largest in-country mobile operator by subscr iber base. In latest news.714. CEO. Bharti Airtel: Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. Airtel comes to you from Bharti Airtel Limited. He will be overseeing Bharti s over seas business. Globally. and presently the Number 1 operator in India. Aircel got the highest rating for overall custom er satisfaction and network quality in 2006 by Voice and Data. Bharti has recently forayed into retail business as Bharti Retail Pvt. The total is 121. the company has a 24. It has successfully launched an international venture with EL Rothschild Group to export fresh agro products exclusively to markets in Europe and USA and has launched Bharti AXA Life Insurance Company Ltd under a jo int venture with AXA. The B harti Group has a diverse business portfolio and has created global brands in th e telecommunication sector. who single-handedly built India’s largest private sector company virtuall y from scratch.86% of the total 394. company announced that Man oj Kohli. They will overcome the h andicaps of illiteracy and lack of mobility”. As a result of the deal. Joint Managing Director and current Chief Executive Officer of Indian and South Asian operations. Aircel s majority stake holder. 2009 Airtel signed a major deal with Manchester United Footba ll Club. 6% share of the wireless services market.Aircel had been selected as the best regional operator in 2008 by Tele. under a MoU with Wal-Mart for the cash & carry business.4% for Vodafone Essar. Reliance The late Dhirubhai Ambani dreamt of a digital India – an India where the common man would have access to affordable means of information and communication. Maxis. Dhir ubhai. All these services are provided under the Airtel brand.2 billions (U SD 3.net. followed by 17. had stated as early as 1999:”Make the tools of information and c ommunication available to people at an affordable cost. Airtel gets the rights to broadcast the matche s played by the team to its customers. The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia Services business offers broadband & telephone servic es in 94 cities. Airtel Telemedia Services & Enterprise Services. Sanjay Kapoor.36 billions)for its shareholders. will become the Chief Executive Officer of the Inter national Business Group from 1st April 2010.243 or 30. making it the largest IPO in Malaysia and Southeast Asia. Bharti Airtel since its inception has been at the forefront of tech nology and has steered the course of the telecom sector in the country with its world class products and services. Airc el was rated as the top mid-size utility company in Business World’s ‘List of Be st Mid-Size Companies’ in 2007. It was with this belief in mind that Reliance Communications (formerly Reliance . raised RM11.
Mumbai. the group has a formidable presence across the telecom valu e chain. Tata Teles ervices has created a pan India presence spread across 20 circles that includes Andhra Pradesh. Orissa. Tata Indicom Enterprise Business Unit. Chennai. including infrastructure and services – f or enterprises as well as individuals. over 330. Gujarat.com (India) ltd. Rajasthan. Bihar. The global reach and industr y expertise of Tata communications drives and delivers a new world of communicat ions.000 route kilometers of a pan-India fiber optic bac kbone. though sadly after his unexpected demise on 6th July 2002. The popular and endearing brand. and consulting. Today.19. TTSL has created more th an 20. Kerala. With the total investment of Rs. The company’s shares are traded on the Bombay S tock Exchange (BSE) and the National Stock Exchange (NSE). Reliance Communications is revolutionizing the way India communicates and networks. This marks a significant chapter in the evolutic brand change over the next few weeks will be unveiled nationally through a high profile campaign cover . the world’s leading international mobile communications company. Formerly Hughes Tele. the auspicious occasi on of Dhirubhai’s 70th birthday.. TTML Organization Tata Teleservices Maharashtra Limited (TTML) spearheads the Tata Group’s presenc e in the Indian telecom sector by being the premier telecommunication service pr ovider. the company was renamed to Tata Teleserv ices Maharashtra Ltd subsequent to the acquisition of 70.Info Comm) started laying 60. Vodafone Vodafone. which will include 10. Teleglobe . Haryana.com (India) Limited [now rena med Tata Teleservices (Maharashtra) Limited] in December 2002 the company swung into an expansion mode. Himachal Pradesh. Starting with the major acquisition of Hughes Tele. truly bringing about a new way of life. applications. Tata Teleservices offers world-class technology and user-friendly services in 20 circles.000 jobs.83% equity shareholding by TATA Group in December 2002. unites the industry and market expertise VSNL. With an ambitious rollout plan both within existing circles and across new circles.924 Crore. VGSL and CIPRIS to become the leading i ntegrated provider of telecommunications solutions.000 Crore (US$ 7. licensed. vertical intelligence and l eadership immerging markets to deliver value-driven.120000 Crore (US$ 29 billion) Tata Group . globally managed solutions.8 million s hareholders. will be transitioned to Vodafone acros s India. has f ully arrived in India brand will be lunched in India from 21st September onwards . Tata Te leservices has a strong workforce of 6000. VSNL international. Tata communications L td. high-capacity. Uttar Pradesh (W). Kolkata. Karnataka. It is capable of delivering a range of services spanning the entire Info Comm (i nformation communication) value chain.5 billion) i n Telecom (FY 2006).000 employees and more than 2. This backbone was commissioned on 28 December 2002. Tamil N adu. Punjab. data and video) digital network. Delhi. In addition. integrated (both wireless and wire line) and convergent (voice. Reliance Communications has a reliable. Maharashtra. that has over 87 companies. Today. Uttar Pradesh (E). Madhya Pradesh and West Bengal. to provide services in Maharashtra (including Mumbai) and Goa. With a committed investment of INR 36. Tata Teleservices Limited along with Tata Teleservices (Maharashtra) Limited serves over 21 million customers in over 4000 towns. Hutch.000 indirect jobs through outsourcing of i ts manpower needs. The company leverages its Tata Global Network. Tata Teleservices Tata Teleservices is part of the INR Rs.
BSNL is number one operator o f India in all services in its license area. 63730 km of Microwave Network connecting 602 District s. Account Less Internet (CLI). Vodafone. multi-protocol convergent IP infrastructure that provides convergent services like voice. energy. Internet.5 million WLL subscribers and 2. BSNL has installed Quality Telecom Network in the country and now focusing on im proving it. construction. g arnering 24 percent of all mobile users as its subscribers. with over 34. Whether it is inaccessible areas of Siachen glacier and North-eastern region of the country. At present th . introduces 3g new telecom services with ICT a pplications in villages and wining customer’s confidence.1 million GSM capacity. said “We have had a great innings as Hutch in India and today marks a new begin that created Hutch. BSNL is the only service provider. BSNL has set up a world class multi-gigabit. m anaging director. 18000 BTS. Leased L ine. is World’s 7th largest Teleco mmunications Company providing comprehensive range of telecom services in India: Wire line.1 million basic phone subscriber s. the Best Mobile sender effective adv ertiser of the year. completed the acquisition of Hutchison Essar in May 2007. formed in October.400 billion and employer over 20. Over the year. helping increased by delivering their total communication needs. Asim Ghosh. m aking focused efforts and planned initiatives to bridge the Rural-Urban Digital Divide ICT sector. Vodafone Essar. capacity. Vodafone has partnered with the Essar Group as its principal joint venture partner. VolP services.000 people. Broadband. 480196 km of OFC Cable. Vodafone is the world’s leading international mobile commun ications company.8 million cellular customers. has bee n named the Most Respected Telecom Company. BSNL has more than 2. BSNL Bharat Sanchar Nigam Ltd. BSNL has been adjudged as the number one ISP in the country. Dial-Up. but an acceleration into t he future with Vodafone’s global expertise. The group has an asset base of over Rs. under the hutch brand. 7330 cities/towns and 5:5 Lakh villages. data and video through the same Backbone and Broadband Access Network. Vodafone Essar. CDMA mobile. That means that almo st every fourth mobile user in the country has a BSNL connection. 4 million WLL capacity. 2000. It now has operation network with over 200 million customers worldwide. Carrier service. 85 percent share of the subscriber base and 92 percent share in reve nue terms. 287 Satellite Station s. DIAS. BSNL serves i ts customers with its bouquet of telecom services. Cellone. About Vodafone Essar Limited: Vodafone Essar in India is a subsidiary of Vodafone Group plc and commenced oper ations in 1994 when its predecessor Hutchison tele Vodafone Essar now has operat ions in 16 circles covering 86% of India’s mobile customer base. In fact there is no telecom operator in the country to beat i ts reach with its wide network giving services in every nook and corner of count ry and operates across India except Delhi and Mumbai. MPLSVPN. Today.ing all important media. VSAT. BSNL is miles ahead of its rivals. it has about 47 . In basic servi ces.” the Vodafone mission is to be the com munications leader in an increasingly connected world – enriching customers live s. expanding the network. more than 37382 fixed exchanges. BSNL cellular service. The company offers vide ranging and most transparent tariff schemes designed to suite every customer. Within a span of five years it has be come one of the largest public sector units in India. GSM Mobile. 20. IN Services etc.3 million line basic telephones. has more than 17. that is. the world’s leading mobile telecommunication company. with 35.4 million intern et customers who access internet through various modes namely. The Essar Group is a diversified business corporation with interests spanning the ma nufacturing and service sectors like steel..1 million customers.
BSNL plans to ex pand its customer base from present 47 million lines to 125 million lines by Dec ember 2007 and infrastructure investment plan to the tune of Rs. TTSL s CDMA brand. The infrastructure asset on telephon e alone is worth about Rs. particularly integrating services at the platform stage. Incorporated in 1996. NTT DOCOMO has played a major role in the evolution of mobile telecommunications through its development of cutting-edge technologies and services.99. VIRGIN MOBILE . network integrating and maintenance of Switching an d Transmission Networks and also has a world class ISO 9000m certified telecom t raining institute. serves over 37 million customers in more than 320.630.6 million Data One broadband customers. Over the yea rs. Today. The committee is responsible f or the identification of key areas where the two companies will work together.37 billion). D OCOMO. DO COMO has already started conducting LTE trials in physical geographies. technologists at DOCOMO have defined industry benchmarks like 3G technology. 390 million (US $2. co mprising of senior personnel from both companies. Installation.26 billion) for last financial year. TATA DOCOMO Tata DOCOMO is Tata Teleservices Limited s (TTSL) telecom service on the GSM pla tform-arising out of the Tata Group s strategic alliance with Japanese telecom m ajor NTT DOCOMO in November 2008. has already estab lished its presence and is the fastest-growing pan-India operator. Today.67 million). Tata Teleservices has received a pan-India lic ense to operate GSM telecom services. The Tata Group-NTT DOCOMO partnership will see offerings such as these being introduced in the Indian market under the Tata DOCOMO brand. mobile payment and a plethora of lifestyle-enhancing applications. Wireless Desktop Phones. 000 million (US $14. Tokyo-based NTT DOCOMO is one of the world s leading mobile operators-in the Jap anese market. under the brand Tata DOCOMO and has also b een allotted spectrum in 18 telecom Circles. Scaling new heights of success.ere are 0. Tata Indicom. Public Booth Telephony and Wire-lin e Services. TTSL and has already rolled out its services in various circles. The company has vast experienc e in Planning. both in terms of services and handset designs.000 towns and villages across the country offering a wide range of telephony services includi ng Mobile Services. The launch of the Tata DOCOMO brand marks a significant milestone in the Indian telecom landscape. Despite being a late entrant. while most of the rest of the indust ry is only beginning to talk of LTE technology and its possible applications. along with Tata Teleservices (M aharashtra) Ltd. will work closely with the Tata Tele services Limited management and provide know-how on helping the company develop its GSM business. Tata Teleservices Limited. as also products and services like the i-modeTM.351 . 820 million (US $8 billion) with net profit to the tune of Rs. the present turnover of BSNL is more than Rs. the world s leading mobile operator. as it stands to redefine the very face of telecoms in India. Tata Teleservices Limited is the pioneer of the CDMA 1x technology plat form in India. the company is clearly the preferred mobile phone service provider in Japan with a 50 per cent market share. not just inside laboratories! DOCOMO is also a global leader in the VAS (Value-Added Services) space.733 crores (US $ 16. Tata DOCOMO has also set up a Business and Technology Cooperation Committee.
Virgin is a leading branded venture capital organisation and is one of the world s most recognised and respected brands. Conceived in 1970 by Sir Richard Branso n, the Virgin Group has gone on to grow very successful businesses in sectors ra nging from mobile telephony to transportation, travel, financial services, media , music and fitness. Virgin has created more than 200 branded companies worldwide, employing approxim ately 50,000 people, in 29 countries. Global branded revenues in 2008 exceeded £ 11 billion (approx. US$17 billion).
DATA ANALYSIS , INTERPRETATION AND FINDINGS
CONSUMER PREFERENCE TOWARDS CELL PHONE SERVICE PROVIDERS S.NO NAME OF THE CELLULAR SERVICE PROVIDER NUMBER OF RESPONDENTS PERCENTAGE OF
RESPONDENTS 1 AIRCEL 03 2 AIRTEL 08 3 TATA DOCOMO 4 RELIANCE 5 MTNL 01 6 VODAFONE 7 IDEA 01 8 VIRGIN 01 9 LOOP 06 10 TATA INDICOM TOTAL 30
10% 27% 02 02 3% 02 3% 3% 20% 04 100
7% 7% 7%
CONSUMER PREFERENCE TOWARDS CELLPHONE SERVICE PROVIDERS
CONSUMER’S PREFERENCE TOWARDS CELL PHONE SERVICE PROVIDERS ON THE BASIS OF AGE G ROUP SR.NO NAME OF CELLUL-AR SERVICE PROVIDE-R UPTO 25 YEARS 25-35 YEARS 35-55 YEARS MORE THAN 55 YEARS TOTAL
NO. OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS OF RESP OND ENTS 1 8 2 3 3 0 4 0 5 0 6 3.5% 7 1 8 6 9 1 10 1 % NO. % NO. % NO. % NO. %
AIRTEL 3 27 AIRCEL 3 10 TATA DOCO 2 7 VODAFONE 2 7 TATA INDICOM 4 13 RELAINCE 2 7 IDEA 1 3 LOOP 3 20 MTNL 3 VIRGIN 1 3
10% 10% 0 1 0 0 3% 10%
4 0 0 3.5% 0 0 0 3
13% 0 2 1 2 0 0 10%
1 0 7% 3.5% 6.5% 0 0
4% 0 0 0 2 1 0
0 0 0 0 6.5% 3.5% 0
0 0 0 0 0 1 0
CONSUMER’S PREFERENCE TOWARDS CELL PHONE SERVICE PROVIDERS ON THE BASIS OF AGE GROUP COMPOSITION OF RESPONDENTS ON THE BASIS OF MARITAL STATUS SR. who are in the age group of 35 – 55 years are using TATA INDICOM .e.33% respondents are using Airtel and 3. majority of them (i. In (above – 55 years) 33.NO MARITAL STATUS NUMBER OF .5% of respond ents are using Reliance.Continue-INFERENCE: Among respondents up to 25 years of age group. 27%) are using AIRTEL followed by AIRCEL users (10%). Consumers in the age group of 25 – 35 years 13% of respondents mostly prefer A IRTEL and 7% of the respondents are using TATA DOCOMO of customers.
17% Using graduate respondents are using mobile conn ections 17 % Using professional % OF RESP17 17 50 17 .RESPONDENT ONDENTS 1 UNDERGRADUATE 5 2 GRADUATE 5 3 POST GRADUATE 15 4 PROFESSIONAL 5 TOTAL 30 100 INFERENCE: The majority of the respondents 50% (POST GRADUATION) are Using mobile connectio ns and 17% (undergraduates).RESPONDENTS PERCENTAGE OF RESPONDENTS 1 2 MARRIED 5 UNMARRIED TOTAL 17 25 83 INFERENCE: The married respondents using mobile connections are about 17%. and the unmarrie d respondents using mobile connections are about 83%.NO EDUCATION QUALIFICATION NO. COMPOSITION OF RESPONDENTS ON THE BASIS OF MARITAL STATUS COMPOSITION OF RESPONDENTS ON THE BASIS OF EDUCATION QUALIFICATION SR.
33% and the house maker are using mobile connections in 17% only.NO OCCUPATION NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS 1 2 3 4 5 BUSINESS 5 17 PROFESSIONAL 5 17 EMPLOYEE 5 17 HOME MAKER 5 17 STUDENT 10 33 TOTAL 30 100 INFERENCE: The Student are using mobile connections in 33. .COMPOSITION OF RESPONDENTS ON THE BASIS OF EDUCATION QUALIFICATION COMPOSITION OF RESPONDENTS ON THE BASIS OF OCCUPATION SR.
NO INCOME NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS 1 BELOW 5000 10 2 BETWEEN 500010000 5 17 3 BETWEEN 1000015000 5 17 4 BETWEEN 1500020000 7 23 5 ABOVE 20000 3 TOTAL 30 33 10 .COMPOSITION OF RESPONDENTS ON THE BASIS OF OCCUPATION COMPOSITION OF RESPONDENTS ON THE BASIS OF INCOME (PER MONTH) S.
% of the respondents are induced by their friends.NO FACTOR 1 MEMBER 2 3 4 5 6 7 INFLUENCING NUMBER OF RESPONDENTS FAMILY 5 17 NEIGHBOURS 5 RELATIONS 5 FRIENDS 10 33 ADVERTISEMENT 00 DEALERS 5 17 OTHERS 0 00 TOTAL 30 100 PERCENTAGE OF RESPONDENTS 17 17 00 INFERENCE: On the basis of purchasing the cellular connections 33. and neighbors have the least effect on the respondents (17%) in inducing them to buy a particular mobile connection. TABLE SHOWING VARIOUS FACTORS INDUCING TO PURCHASE THE MOBILE CONNECTIONS COMPOSITION OF RESPONDENTS ON THE BASIS OF PURPOSE OF PURCHASE OF THE CELL CONNECTIONS SR.COMPOSITION OF RESPONDENTS ON THE BASIS OF INCOME PER(MONTH) TABLE SHOWING VARIOUS FACTORS INDUCING TO PURCHASE THE MOBILE CONNECTIONS SR.RESPONDENTS PERCENTAGE OF RESPONDENTS FOR BUSINESS 10 33 FOR PERSONAL 20 67 .NO 1 2 PURPOSE NO.
NO USAGE NUMBER OF RESPONDENT PERCENTAGE OF RESPONDENT 1 INCOMING 0 2 OUTGOING 0 3 BOTH 28 93 4 SMS 0 0 5 VAS 2 7 TOTAL 30 0 0 0 INFERENCE: About 93% of the respondents are using cell connections for incoming and Outgoing both. but only 7% of respondents are only using cell connections for VA S.% of the respondents are using their cellul arconnection for their business. and 67.% of the respondents are using cellular connection for their personal usage. COMPOSITION OF RESPONDENTS ON THE BASIS OF PURPOSE OF PURCHASE OF THE CELL CONNECTIONS COMPOSITION OF RESPONDENTS ON THE BASIS OF USEFULNESS OF MOBILE CONNECTIONS SR.TOTAL 30 100 INFERENCE: It can be inferred from here that 33. .
and 17.NO 1 2 3 4 FACTORS NUMBER OF RESPONDENT BRAND IMAGE 10 33 AVAILABILTY 10 33 CUSTMER CARESERVICE 5 SERVICE CHARGES 5 17 TOTAL INFERENCE: 33% of respondents are purchasing the particular service by its brand image.% of respondents are choosing the particular service provider by their servi ce charges. %OF RESPONDENTS 17 .COMPOSITION OF RESPONDENTS ON THE BASIS OF USEFULNESS OF MOBILE CONNECTIONS INFLUENCING FACTORS TO PURCHASE THE CELL PHONE (ANOTHER VIEW) SR.
RESPOND RES PONDENT 1 PRICE 20 67 10 2 PERFORMANCE 20 3 4 % NON 33 30 67 10 33 SCHEMES 20 67 00 PERIODICAL OFFERS 20 67 0 0 OUT GOING CALLS 30 00 10 33 30 10 33 30 5 20 .FACTORS INFLUENCING TO PURCHASE A PARTICULAR MOBILE CONNECTION CONSUMER’S SATISFACTION LEVEL ON THE BASIS OF PERFORMACE OF THE MOBILE CONNECTI ON SEVICE PROVIDERS SR.RESP % OF RESPON NO.RESP % OF RESPON NO.NO LEVEL SATISFACTION HIGE SATISFACTORY SATISFACTORY SATISFACTORY TOTAL NO.RESP % OF RESPON NO.
NO RESPONDENTS PREPAID 23 76% POST PAID 7 % OF RESPONDENTS 24% .NO NATURE NUMBER OF RESPONDENTS 1 NECESSITY 2 STATUS 4 3 LUXURY 0 4 COMPLUSION TOATAL OF RESPONDENTS 20 13 0 6 67 20 PERCENTAGE INFERENCE: 67. and 13 % of respondents are only states that mobile connections are Status.67 10 33 30 CONSUMER’S SATISFACTION LEVEL ON THE BASIS OF PERFORMACE OF THE MOBILE CONNECTI ON SEVICE PROVIDERS CONSUMER’S ATTITUDE TOWARDS THE IMPORTANCE OF HAVING A MOBILE CONNECTION SR. PREFERANCE TOWARDS PREPAID AND POST PAID SR.% of the respondents are states that mobile connections are necessity.
AWARENESS OF DETAILS RELATING TO MOBLIE CONNECTION SR. Tata Indicom and Vodafone should try to attract old peoples al . (Up to25yea rs) Aircel. RELAINCE and MNTL should try to attract the young people.NO AWARE NEUTRAL SCHEME 28 2 BALANCE OF TALK CHARGES PERIODICAL OFFERS UNAWARE 0 30 0 10 5 0 15 COMPOSITION OF DIFFICULTIES PHONE CONNECTION (prepaid/postpaid) YES 15 NO 15 SUGGESTIONS Tata Indicom and Vodafone should try to expand their customer’s networ k.
can be resolved by decisive policy action. but the task of taking telecom to the other 90 per cent of the population will call for even greater innovation in policymaking. So the service providers should try to make awareness o f their customer services to their customers. 75% of the peoples are unaware about the various services rendered by their service provider. Reliance customers are highly dissatisfied about the p erformance of the service provider. CONCLUSION India has one of the world’s largest telecommunication networks.70 billion. Virgin mobile . In just six years. Still th ree-fourths of the land mass is not illuminated by a cellular signal and the pri ce of the instrument is beyond the reach of a substantial section of the populat ion let alone the charges for its use. landed itself a winner in the mobile phone. releasing adequate spectrum to oper ators in the metros. Effective tariffs have dropped from over Rs. of course. All the service providers are made good advertisements for their servi ce. Japan and Russia can boast of.so. and a proactive investment policy that invites many more eq . such as a creative use of the Universal Services Obli gation fund that now has over Rs. technology and marketing. So they should try to add some advanced feat ures towards their services. All the service providers should try to increase post paid users. advertisements are take little part for influencing the consumers.14 a minute to Re 1. bringing the phone within reach of people even below the middle-class. The Government may have. Tata Indicom should attract the customers by reducing their price. th e US. The telecom sto ry continues to be the best evidence of the efficacy of the reforms process. a subscriber base that only four other countries China. therefore. Tata Indicom and Vodafone should give periodical offers to their custo mers. Tata Indicom should increase their network strength to attract more c ustomers. None can doubt the correlation between this explosive growth in numbers and the steep decline in the cost of the mobile pho ne and of its usage. Because. Reliance. These issues. the number of mobile subscribers has gone from just about one mi llion to 100 million.
uipment manufacturers to set up base in this country. ANNEXURE . The road for India achieving the top most position in telecommunication is no lo nger a dream as India is nearing China in all aspects in few years India will ov er power all countries and achieve its target of top most position in telecom in dustry.
Between 10000-15000 b) Between 5000-10000 d).Personal det ails (Put tick mark (√) in appropriate box.) Name __________________________ Age 0-25yrs Male 25-35yrs Female unmarried 35-55yrs > 55yr. Kindly spare some of your valuable time to go through the que stionnaire & give your view on this topic. Gender: Marital status: married Occupation: _____________________ Qualification: Undergraduate Professional Graduate Post-graduate Specify) Income group Monthly income a) Below 5000 c). I am conducting a survey on consumer (existing/new) behavior during taking new m obile-connections. Please name the cellular service/connection you are currently using a) b) c) d) Airtel Tata Indicom Vodafone virgin mobile . The information provided by you would be kept confidential & only be used for improving customer service.QUESTIONNAIRE Dear Sir/Madam. Between 15000-20000 1.
Non-Satisfied a)Price b) Performance . For which purpose are you using your mobile connection (Service Provider) mai nly for? a) Incoming b) Outgoing c) Both d) SMS Messaging e) V-A-S 5. Satisfaction level about your cell phone service provider? 1.Satisfied 3. Why do you buy the mobile connection? a) For business b) For personal 4. Highly Satisfied 2. What factor influenced you to decide your Cellular service provider? a)Brand Image b)Availability c)Customer care service d)Service charges 6.e) Reliance Comm f) Aircel g) MTNl h) Idea i) Tata docomo j) loop 2. Who influenced you to by the particular cell phone service provider? a) Family Member b) Neighbors c) Relations d) Friends e) Advertisement f) Dealers g) Others 3.
c) Schemes d) Periodical Offers e) Out going call Charges 7. Which type of scheme is most preferable by you? a) Prepaid b) Postpaid 9. Do you face any difficulty in your cell phone connection? a) Yes b) No 11. What is your valuable suggestion / opinion about your cell phone service provider ? 12.Unaware 10. You consider owing a mobile connection as a a) Necessity b) Status c) Luxury d) Compulsion 8. . As per your opinion how can you improve the existing brand you are using? An y recommendations for Tata Indicom if you have to.Aware a) Scheme b) Balance of Talk charges c) Periodical offers 2.Neutral 3. If you are a existing customer of Tata Indicom then which type of value adde d services do you want to incorporate in Tata Indicom ____________________________________________________________________ 13. Are you aware of the following details relating in your mobile connection (P re / Postpaid connection) 1.
S. Jean-Paul Rodriguez).com • http:www. Ramaswamy.tataindicom. Research Methodology . JOURNALS• Business India • 4Ps of Marketing INTERNET SOURCE• http: www.R.economicstimes.000 wireless subscribers in the United States as of today on its web site posting. Marketing Management. it was called t he cellular mobile telephone industry and what follows tells the real story of h ow it began.thehindubusinessline. This wireless telephone evolution was really started by AT&T prior to its divest iture.org • http: www. Princeton-Hall India 2003 Marketing Research-Naresh .________________________________________________________________________________ ______________ ______________________________________________________________________________ BIBLIOGRAPHY BOOKS• • • • • • • • • Philip Kotler. which company was first to launch service and how it evolved commer cially over the past 24 years.com ARTICLES HISTORY OF CELLULAR SERVICE PROVIDERS -----BY THOMAS WILLIAMS The Evolution of Wireless Telephone Service in the United States The Wireless Industry Trade Association (CTIA) estimates that there are nearly 2 35.Malhotra Business Research methods : ICMR Publication Marketing Management .Kothari Operation Research – Vittal Business Week The Times Market Areas Analysis (Author: Dr.wikipedia.google. This narrative is not about how great and wonderful AT&T was. That is quite an accomplishment for an industry that started less than 25 years ago.C.K.com • http :www.yahoo. 11th Ed.com • www.V.indiatimes. At the beginning. . but rather about how the wireless industry got its start.com • http: www.000.
Ameritech . AT&T enlisted the aid of Motorola Corporation and O KI Data Corporation to provide the in-car mobile telephone units for the service trial that would be open to 3000 corporate users from the Chicago Region s Fort une 500 Companies. Included in the Dive sture Agreement was the requirement for AT&T to transfer its cellular service li censes to the newly incorporated Regional Bell Operating Companies. 1983. These local Bell Operati ng Companies were allowed by the Justice Department to Regionalize and thus Regi onal Bell Operating Companies (RBOC s) were formed in 1982. AT&T had been working on the concept of ce llular telephone service or "Advanced Mobile Phone Service" (AMPS) since the mid -sixties.S. CenTel became a partner in the launch system. The Regional Bell Operating Company for the Midwest was known as Ameritech. AT&T deemed the test successful and the FCC granted licenses for the service to AT&T in all of the Metropolitan Statistical Areas (MSA s) served by AT&T s Bell Operating Companies. Illinois Bell Telephone. area launched their cellular system. Since a portion of the service area for the new syste m was in an area where local phone service was provided by an independent teleph one company. its compet itors and other independent telephone companies. conducted a market trial of its new cellular service called AMPS in the late 70 s and earl y 80 s in Chicago. the wireline company. other non-AT&T radio service provi ders were able to convince the Federal Government that they too should be allowe d to provide cellular mobile telephone service in markets awarded to AT&T s Bell Operating Companies. even those not served by AT&T s operating companies would be open to competition.AT&T s Bell Telephone Laboratories was one of the early inventors of Cellular Te lephone Service in the United States. AT&T was developing cellular mobile telephone service to replace Mobile Telephon e Service (MTS) and Improved Mobile Telephone Service (IMTS) as both of these ex isting technologies for mobile telephone service could not provide enough call c apacity to meet the demands of the market place for mobile telephone service. the FCC ruled that all areas of the country. On October 13. a consortium of media co mpanies in the Washington D. AT&T agreed to dive st itself of all of its local Bell Operating Companies. branded as C . AT&T through its Regional Telephone Company. The original trial system built by AT&T consisted of three (3) radio towers loca ted in Chicago that were linked to a single mobile telephone switching office (M TSO) that was located in a suburb of Chicago. Justice Department. Illinois. Throughout 1982 and for most of 1983. There were now 306 MSA s within the United States were two compa nies in each MSA were to be granted licenses to provide cellular service. a nd hand the call to another of the three towers when a vehicle with an AMPS tele phone was moving from one geographic area to another geographic area covered by one of the three test radio towers. Upon reaching an agreement with the U. Since AT&T was being sued by the Justice Department for anti-competitive behavio r in the market place during the market test. Ameritech assumed ownership of the original AT&T market trial cellular system in Chicago when the AT&T license for cellular service was transferred to the newly formed RBOC. were designed to operate utiliz ing analog radio technology and were restricted to radio spectrum within the 800 MHZ band range. after allowing other companies to provide cellula r mobile phone service in competition with AT&T. known as CenTel. Shortly after Ameritech launched its commercial system. The MTSO was a call processing swi tch with an integrated computer that was able to track a mobile originated call being handled by one of the three radio towers. Further. launched the country s first commercial cellular radio s ystem with nine cell sites and was in business to begin offering service under t he Ameritech Mobile brand.C. that we call cell sites today. Ameritech expanded the original market tri al system to serve the metropolitan Chicago area. The original cellular radio systems that were to be deployed by AT&T. a wire line company and a non-wireline company.
South Western Bell. Alaska. More on that chapter later! . The last RSA to receive cellular service was in Barrow. While systems were being built in the major cities. CCI. GTE. During the initial build out of the cellular systems throughout the United State s. A udiovox and Nokia introduced smaller portable handsets. General Electric introduced its line of car phones. US West. Alaska was located in the last RSA to receive service. AllTel. the manufactures supporting the new Cellular Industry were busy developing ne w cellular telephones and new mobile telephone switching equipment. Nynex. the RBOC s. With each passing year. the non-wireline company of the 80 s. The first po rtable handheld cellular telephone was introduced by Motorola in 1984. the communications act of 1996 would write the next chapter for the evolution of the wireless telephone industry in the United States. the RBOC s.ellular One. Motorola. B arrow. voice mail. But this was just the beginning. Bell Atlanti c. Pacific Telesys. three way calling. new callin g features were available. Service was launch ed in February 1993. Bell South. similar to the licenses awar ded in the MSA s would be awarded to a wireline and non-wireline company. the non-wireline companies. Thumb Cellular. Pacific Telecom. By the early 90 s all areas called Rural Service Areas or RSA s had at least one licen see. the FCC begin to offer cellu lar mobile telephone service licenses for rural America via auction to anyone wi shing to serve rural America. Cellular Mobile Phone Service had arrived in the U nited States. Panasonic. Illinois Valley. Mc Caw. Century. The licensee providing service to that RSA was a partnershi p among the Native American peoples of northern Alaska and Pacific Telecom Cellu lar. systems were being built and launched in just about every major city in the United States. briefcase cellular phones and transportable cellular telephones were available from OKI. These rural licenses. MCI. Nokia. Companies such as Dobson. Centennial. CenTel. Midwest. The Independ ents. and others were all in the rush to build and l aunch service. large media consortiums and others too num erous to list. Comcast. TDS. Cel lular One. and Mitsubishi. Ericsson and Alcatel. Contel. Ameritech. The list of compan ies building and launching systems was long. Motorola introduced its new "Flip" Phone called the Star-Tac in 1989. call forwarding from s witch manufacturers such as AT&T information System. Northern T elecom.
as ob served from international perspective. the present paper deciphers the recent past. the dynamics that set law of motion. In such an inherently dynamic situation it is convenie nt to assume that cross-country experiences incubate the most recent seeds of ch ange.Telecom Sector in India: Vision 2020 Manas Bhattacharya*. The present paper isolates the agents of change based on international experienc es and situates India in this development continuum. competition policy and technology. Government of India) Introduction The purpose of this paper is to construct a vision of Indian telecom sector for the year 2020. The agents of change. In attempting to do so. Process of change is often volatile and responsive to intervention and global ci rcumstances impacting it. have been broadly categorized into econom ic structure. . Development being a continuous process. IES (Deputy Director General (Finance). This is because countries at various stages of development encapsulate dev elopmental experiences that occur with the passage of time. about two decades from now. Ministry o f Communications & IT. Pre-portrayal of a stage of development in future requires understanding of the process of change.. the choice of the year 2020 is just an arbitrary division of time. i. a pr e-defined time horizon to take stock of what is likely to be achieved.e. Economic reforms and liberaliza tion have driven telecom sector through several transmission channels of which t hese three categories are of major significance. Department of Telecommunications.
The current policy stance affecting telecom sector in India is presented in the Appendix. India introduced pri vate competition in value-added services in 1992 followed by opening up of cellu lar and basic services for local area to private competition.0 3 52.710. Despite asymmetry in initial market endowments between public sector incumbents and private operators. Consequently.The paper. Table 1: Top 14 countries in the world in terms of number of main telephone line s in operation Country No. 18. their cellular subscriber base is tiny compared to the private operators. the act of opening up of the market unleashed dynamism th at was hitherto latent in the sector.2 1 190. BSNL and MTNL owned 34.0 8 Russia 25. is divided into six sections.000.018.095. like many other countries of the world. The current policy configurations of India’s telecom sector have been listed in the Appendix. as they developed.0 3 Germany 42.45 million privately owned DELs.0 14 Brazil 13.411.0 2 France 32. Reforms and Performance India.7 4 179.9 13 11 . extended to a vision for 2020 in each of these sections.0 1 Japan 62. As on December 31. The paper concludes in section 6 .7 Canada 17. 1.215.0 9 22.0 12 37.430.0 10 20.0 8 27.000.724.0 4 China 40. of lines in 2001 (‘000) Ranks (2001) USA 159. Two state-owned public sector incumbents with a large existing subscri ber base dominate the fixed line service. the two Publi c Sector Enterprises (PSEs).8 5 Turkey 13.4 11 17.3.034.567. The rank improved to 7th position in 2001 (Table 1). have adopted a gradual approach t o telecom sector reform through selective privatization and managed competition in different segments of the telecom market. synergy between telecom and IT. 2001.735.9 7 35. The Telecom Regula tory Authority of India (TRAI) was constituted in 1997 as an independent regulat or in this sector.303.0 10 Korea.400 5 34. Section 1 gives a brief account of the era of competition that was heralded in Indian telecom sector and the results achieved.0 2 76. of lines in 1995 (‘000) Ranks (1995) No.280.3 million cellular subscribers in the country in June 2002.0 6 Italy 24.032. Competition was also introduced in national long distance (NL D) and international long distance (ILD) telephony at the start of the current d ecade .263.845.700. Logical extension of the arguments.3 12 Spain 15. particularly comparison with oth er major countries intrigued further discussions on economic structure. they had only 0.7 13 18.427. These two PSEs were allo wed belated entry into the cellular segment in the beginning of the present deca de. I ndia ranked 14th in the world in 1995. competition policy and technology in sections 2.2 million subscribers . Analysis of the results. Out of 7.705. as it unfolds.000. Rep. To begin with.900.600.73 million Direct Exchange Lines (DELs) against 0.4 and 5 respectively.319.4 6 34. In terms of overall size of main telephone lines in operation. This is evident from a number of performan ce indicators.9 9 UK 29.292.
23 1996 33. main line in operation) has been taken as supply whereas d emand has been computed by adding the number of subscribers in the waiting list to the number of DELs in operation.India 11.24 Source: Computed from the data published in the Year book of Statistics: Telecom munication Services.90 6.89 5. The market potential may be much mo re than what is revealed through waiting list because the number in the waiting list reveals demand registered in those areas where telecommunication facilities are available and reasonable expectations exist for demand to be fulfilled.58 9.e.65 10. which witn essed emergence of competitive pressure in the sector.04 1994 23.13 1992 17. The number of DEL s in operation (i. Table 2 shows a significant decline in this ratio since 1995 in Indian fixed line segment. ITU Network expansion in India was accompanied by an increase in productivity of tel ecom staff measured in terms of ratio of number of main telephone lines in opera tion to total number of full time telecom staff (Table 2).. a convenient proxy for the change in telecom prices c ould be constructed in terms of observed trend in revenue earned from telephone services at constant prices expressed as a ratio of number of main telephone lin es in operation.32 11.17 1995 28. it needs to be kept in mind that th e number in the waiting list. The beginning of the declining tr end in per line revenue at constant prices coincided with the period. Table 2: Trend in productivity and price Year Number of main telephone lines in operation per full-time telecom staff Telephone service revenue at constant prices (CPI: 1995=100) per main telephone line in operation (Rs. One way of looking at the welfare gains to subscribers is to watch the trend in prices for telecom services. ‘000) 1991 15.38 10. demand may not get regi stered at all and remain suppressed.97 4. in certain cases. 1991-2000. whether such prices came down in the competitive re gime. However.1 7 Source: World Telecommunication Development Report 2002. Steps were intensified to introduce private competition in the basic and cellular services thereafter.92 1999 62.978.62 1998 50.732. In the areas where telecom infrastructure is not adequate.93 4.45 9. ITU Table 3 shows the long run trend in supply and demand of DELs.25 1993 20.0 14 34. Because of complications involved in summarizing differential rates applicable t o peak and non-peak hours. It may be noted that the National Telecom Policy was announced in May 1994. is unlikely to reflect potential demand for telecom services in the economy. .12 1997 41. What consumer ultimately pays includes rental as well as telecom tariffs.
Canada 59.73 Japan 49.96 7.52 47.57 2001 32.12 4.66 3.33 47.45 2.78 24.98 23.90 0.33 China 3.18 Russia 16. which does not get narrowed down as supply expands.51 Turkey 21.47 0. Ministry of Communications.91 Italy 43.48 13.59 1991 5. The growth momen tum is sustained in the current decade with a positive supply gap.81 57.69 28.80 2.43 1999 21.84 3.03 1993 6.65 1995 9.Table 3: DEL: Supply and demand (millions) Year ending March 31 Direct Exchange Lines (DELs) Waiting List Demand 1981 2. Go vernment of India.61 Germany 51.59 1.24 65.15 0.69 63.80 2.36 Source: Indian Telecommunication Statistics 2002.50 Brazil 8.6 1983 2.54 2. It shows that market for fixed line is supply constrained and demand tends to increase as supply expands.45 59.60 .49 1.95 1997 14.13 1985 2.44 2.42 5.85 Spain 38.01 UK 50.74 1987 3.06 41.92 35.51 43.44 2001 66. The figure also reveals that there is significant growth in sup ply of DEL in the 90s. The figure below shows an interesting phenomenon. Total demand tends to exceed s upply by a margin.61 1989 4.89 17.30 France 56.15 11. Total demand Waiting List Del Table 4 indicates tele-density for the countries included in Table 1 as measured in terms of number of main lines per 100 inhabitants.35 57.17 1. Rep.85 9.07 1.11 21. the eventful decade of sectoral reforms.33 Korea. Table 4: Number of main telephone lines per 100 inhabitants Country 1995 USA 60.
A comparison between Table 1 and Table 4 reveals that countries with smaller n etwork sizes than India are having much higher tele-densities. S tructural issues. Considering the fact t hat India’s DEL grew at a CAGR of 19. by itself subsumes differences in certain structural characteristics and therefore diverts the focus of attention from structural gap to income gap .India 1. 2. with a p . on the other hand. It is for them that the present paper goes on to prove that the effectiveness of direct promotion of telecommunications as a complementary policy to overall macroeconomic reforms will be determined in an important way by how structural i ssues in the economy are addressed.. Moldova had a tele-density of 13. Boli via had per capita income of US$ 2380 in 2000 compared to US$ 2390 for India.4 per cent during 1995-2000. Nevertheless.what accounts for cross-country differences in growth experiences . Georgia.e. income gap.33 with a per capita income of US$ 2240. it is noteworthy that there are countries with per capita in come less than that of India but with higher tele-density.e. In the first place. closing the d igital divide in terms of tele-density remains a daunting task. significant ef fort would be needed to step up growth rate above 23 per cent. Countries do differ among themselves in respect of their economic structure. India’s comparative ranking in the world improved from 160 in 1 990 to 145 in 2000. One plausible reason could be because of the importance that has been attach ed to income gap as a factor explaining digital divide. Understanding telecom growth prospect would require understanding of the sources of growth --. The correspon ding growth rates to reach China and Japan’s levels are 23. However. assuming population size to remain at 20 01 level of 1. B olivia’s tele-density was 6.05 in that year against 3..38 Source: World Telecommunication Development Report 2002.48 lines per 100 peop le even if India’s network size reaches the level of USA. the size of the population is responsible for India’s low tele-density . Assuming no chan ge in India’s size of population (i. Proponents o f ‘income determinism’ may stop short of addressing structural factors because o f their primary concern regarding income transfer between the developed to the d eveloping countries as the only way to address the problems of digital divide. in terms of total tele-density.06 per cent and 17. Assuming these three to be key drive rs of growth it can be said that ‘Vision 2020’ of Indian telecom sector will be shaped in an important way by the evolving economic structure. sectoral reforms including competition policy and technology trend. However. influence of e conomic structure on telecom expansion (or for that matter on achievable level o f tele-density) does not find explicit consideration in today’s literature on te lecom economics as much as the other two factors. an improvement by 15 positions . The present paper estimates that in order to attain the network size of USA in 2 001 India has to expand its number of operational telephone lines at a compound annual growth rate (CAGR) of 23. ITU Above table indicates that despite phenomenal achievement in terms of network ex pansion.44 per cent between 2002 and 2020. i. Moreover.29 3. Even that is not going to mean much in terms of tele-den sities in comparison to most of the countries cited in Table 4.20 for India. i. competition and technolo gy. Economic Structure It has been observed that ‘growth in the number of new telephone subscribers has far exceeded the growth in the global economy’ in the last twenty years . s ectoral policies and technological changes. the sum of fixed-lines and mobile subscribers per 100 inhabitants.63 per cent respectively..03 billion). This shows that aggregate growth alone does not determine telecom expansion and there may be need to look at composition of growth as well. As for instance. India’s tele-density will be 18.e. are more pertinent to the believers of ‘lea pfrogging’ capabilities of the countries who are on the wrong side of the divide .
20 2390 41. It was also noted that these countries had either more equitable income distribution than India (measured in terms of percentage of population living on less than $2 a day) or had a higher weightage of value added by the service sector in the Gross Domestic product (GDP) or bot h. Consequently. To assess the significance of service sector in telecom development.54 + 0.er capita income of US$ 2470 had a much higher tele-density of 13. tele-density was regressed on percentage of populatio n living on less than $2 a day and per capita income over a cross-section of 77 countries for the year 2000 to yield the following results: Tele-density = 9. The result shows that income distribution has a much larger coefficient than per capita income and therefore emphasizes the fact that telecom development strate gy should have substantial equity component built into it. The result indicates a strong association between service sector growth and tele com development implying that future telecom expansion will depend significantly on the proliferation of services in the economy.0019**(Per capita income) R2 = 0.82.86 2470 Less than 2 52 Ecuador 10. tele-densit y has been regressed on percentage contribution of value added by the service se ctor in GDP over a cross-section of 115 countries for the year 2000. it can be said that targeted intervention through acces s promotion can be potentially instrumental in delivering growth with equity.86.31.63 – 0. ** : Significant at 1%. tele-d ensity was significantly higher at 10. Ac cess promotion means expansion of telecommunication and therefore will cause gro wth to occur . The followi ng result was obtained: Tele-density = . 1991-2000.9267** (Percentage contribution of value added by the service sector in GDP) R2 = 0.48. Table 5: Structural characteristics and tele-density. 2000 Country Tele-density (per 100 inhabitants) Per capita income ($ PPP) Percentage of population living on less than $2 a day Value added by t he service sector in the Gross Domestic product (GDP) (%) Moldova 13.4 53 Bolivia 6. (ii) World Development Repo rt 2002. a broad based access promotion strategy would lead .3 64 Source: (i) Year book of statistics. Though Ecu ador had a little higher per capita income of US$ 2920 compared to India. As a matter of strategy.4 46 Georgia 13.05 2380 51. In order to examine the generality with which such relationships manifest in a l arger sample of countries.00 2920 52. ** : Significant at 1%.00. ITU. A comparative picture of India vis-à-vis these countries in respect of the two a foresaid characteristics are presented in Table 5.33 2240 38.4 48 India 3.1563** (Percentage of population living on less than $2 a day) + 0.
The sub sidy element of the USO will be financed from a fund generated through Universal Service Levy (USL). Many such projects have developed a pplications based on local content and software in Indian languages and user-fri endly icons for illiterate people . the public sector incumbents have spearheaded expansion of rural telepho ny with very little contribution by the private sector. ICT has caused rapid innovations to occur in all other areas of material sciences.9 million in 2001. Thrust on Universal Service Obligati on (USO) as a part of broad based telecommunication development strategy began with the National Telecom Policy of 1994 and was reinforced as one of the object ives of the New Telecom Policy 1999 (NTP-99).4 million villages. However. other service providers are also allowed to participate in it subject to technical feasibility. there are certain pilot projects in the rural sector working to evolve cost effective wireless technological solutions in partnership with local service providers. ICT has improved access in the fields of education. So far. levy of certain percentage of license fees charged fr om different service providers. governance and all aspects of business services. increasing from 21.4 per cent in March 2001 . Though USO is mandatory for the basic service operators. for which open tenders were invited in January 1995. The Universal Service Support Policy (USSP) came into effec t from April 1. The licenses for the basic service s. As a meta-technology. The first step towards broad based access promotion in India was initiated in th e eighties when Public Call Offices (PCOs) were given private franchises for bot h domestic and long distance services.2 millio n in 1993 to 0. Share of rural areas in total number of DELs in the country stood at about 22. Telecommunications have emerged as a springboard of ICT applications with econom y-wide ramifications. There are plenty of anecdotal evidences to show that tele com is improving life chances across the strata of the society tiding over the ‘ divide’. accessibility and affordability’ . ch osen through a multi-layered bidding process subject to a ceiling of the benchma rk cost estimated by the DOT on the basis of efficiency criteria .to more equitable growth. It has also improved the abil ities of the poor to manage risks and mitigate vulnerabilities through provision of timely information. 0. The trend is suggestive of potential scope of expansion of telecommunication in the rural sector.e.contained an obligatory p rovision in the agreement for the private operators to provide 10 per cent of th e DELs as Village Public Telephone (VPT). By the end of December 3 1. Private sector presence is prolific in Public Call Offices (PCOs) and Internet K iosks in the cities and towns . Allocation of subsidy will be to the bidder quoting lowest amount of subsidy. As a fabric of inf ormation society. healthcare . NTP-99 targeted complete rural coverag e by the end of 2002 providing Village Public Telephones in all the 0. By the end of January 2001. the private operators covered only 718 vil lages and the rest was by the public sector. The Eighth Plan (1992-97) targeted at provisio n of Panchayat phones in 360. the guidelines also envisaged upgradation of VPTs to Public Telecom and Information Centers (P TICs) to provide data transmission facilities and installation of high speed PTI Cs (HPTICs) in the Short Distance Charging Areas (SDCAs) with broadband access.000 villages. 2001.6 million villages with emphasis on ‘availability. As a follow up of NTP 99 and subsequent recommen dations of the TRAI. i.6 per cent in Jan uary 2002..4 million villages have been covered. Apart from expansion of VPTs. out of 0. Vision 2020 is a vision of information society and knowledge economy built on th . A whole range of information based industry and applications have come up creating new sources of employment and earning with welfare enhancing conseq uences for the wealthy and the poor. 2002 and the Department of Telecommunications (DOT) issued detai led guidelines for implementation . Total number of PCOs grew from 0.
Such a vision builds on a much larger vision of all round development of IT that pervades wide cross-section of Indian economy and society. Appropriate synergy between the domestic and export market will be key to enduring success of Indian IT sector in overseas market and development of state-of-the art telecom infrastructure is a prerequisite to both. Vision 2020 will be a vis ion of wealthier and more equal society full of creativity. therefore. This is possible when India is ab le to broad-base the development of IT with a strong and large domestic market s upporting innovation and its diffusion along with the growth of component manufa cturing base. ‘enclave’ type development of software with exclus ive focus on export can not bring about desired benefits if such a strategy igno res the linkages between export and the domestic market. There has been significant expansion in both during the last decade (Table 6). Hardware is a common platform for both IT and telecom. In India. need for India to climb value chain with more innovative software products in the international market. development of human resources through IT education. it flourishes on the telecom-network and in turn permits modern day telecommunicati ons to use sophisticated IT-software. As discussion in the sub sequent paragraphs will show. 3. There is. scrutiny of the structure of India’s software export vis-à-vis the emerg ing dynamics of the global market reveals that India has marginal presence in th e fastest growing segment of the global IT market consisting of software package s and software products . on the other hand. First. therefore. Once this is achieved. Net foreign exchange contribution will increase if India is able to develop a strong base of hardware . Two important indicators of IT penetration in Indian market are Internet use and availability of Personal Computers (PCs).000 Availability of Personal Compute . the aggressive expansion of public sector telecommun ications infrastructure in hitherto uncharted territories of geographically remo te locations would unleash latent economic energies and market forces. There is a legacy vision derived from export-success of India’s software that ha s given rise to optimism regarding India’s growing pre-eminence in global IT can vas. have ach ieved greater success through diversification of exports with software packages . training and skill development is fundamental to the whole process. Deeper analysis shows that there is need for a comprehensive IT development strategy to ensure India’s durable presence in the global software market. Part of today’s IT is ‘telecom writ large’.e edifice of ICT. Rapid technological conv ergence has already implied a symbiotic overlap between the development strategi es of IT and telecommunications. Vision 2020. innovation and compe tition.000 410. is a much larger vision.Telecom and IT The vision of telecommunications in 2020 is a vision of information society buil t on an edifice where IT and telecommunications merge. India’s close competitors. Finally. it is to be appreciated that foreign exchange contribution of software ex port net of import of hardware is roughly fifty per cent . Second. Table 6: Growth in availability of Personal Computers and estimated number of In ternet users Year rs 1992 Estimated number of Internet users 1. which wil l erode the very foundation of perceived lack of profitability of rural investme nt among the private investors.
colleges and primary health centers.000 1994 10.800.24 High income countries 3992. connect ions will be provided in schools.200. a spectrum of technologies has been unleashed to connect remote villages. wireless cum wired technology developed by C-DOT .1993 2. their expansion crucially hinges on the g rowth of telecommunications infrastructure. telecottages and cybercafes have emerged in importa nt roles in expanding community access to ICT popularizing IT among the masses a nd promoting domestic market.66 8. 2001 Countries falling in different income categories 0 inhabitants PCs per 100 inhabitants Low income countries Of which India 62. In India.000 2. World Telecommunication Development Report 2002 Internet kiosks. Besides. Per capita a vailability of PC is also very low.000 1996 450. Continuous evaluation of t he socio economic impact of the project is a part of the initiative . Number of users of I nternet is still a negligible fraction of India’s total population.400.500. It seeks to provide voice and Internet connections in 1000 villages with the use of CorDect system.000 2.16 0.000 2000 5.000 800. s witching systems of different capacities integrated with underground cables. India remains on the wrong side of the divide (Table 7).94 2.87 37. Cor Dect and medium capacity satellite systems. Box 1: Harbingers of information society SARI: Sustainable Access in Rural India (SARI) is a joint initiative between MIT Media Lab. Table 7: Internet penetration and PC availability. multimedia . ITU Despite impressive growth in the number of Internet users and availability of PC s. However.58 Lower middle income countries 264. The proje ct also provides for interest free loans and easy installments for purchase of c omputers and training support to technical personnel. The project is located in northern Madurai district of Chenn ai.000 1998 1.000 1997 700.59 Internet users per 10. It is envisaged that with the growth of telecom infrastructure such examples would mu ltiply and create an information society in not so distant a future.000 1999 2. radio systems. n-Logue: ‘n-Logue’ is a company incubated by a group of professionals in IIT Che nnai under private initiative. Source: Yearbook of statistics. IIT Chennai and the I-Gyan Foundation. Center for International Development at Harvard.45 Upper middle income countries 992. Apart from provision of a kiosk in each village.21 68.00.000 1995 250.000.31 Source: ITU.000 3.0000 4.000 1.000 Note: Data for 1991 on Internet users is not available.000 1.000 560. telekiosks. which includes Wireless in Local Loop (WLL).700.00 0.300. a number of small-scale ICT initiatives is already at work in different parts of the country (Box 1). The series start from 19 92 because data on both is available from this year. 1991-2000.600. The company offers wireless equipment.
Such kiosks are coming up in Madhya Pradesh. Majority of these Centers are own and run by the vil lage communities with costs borne by the Panchayats. revenue accounting. Source: Sood.S. a company dealing in food products . Tarahaat. Some such examples include operations like data entry. preparation and maintenance of database.com: This is a commercial project promoted by a Delhi based NGO. School Net India: An initiative of the Infrastructure Leasing and Financial Serv ices (IL&FS) to develop online multilingual content and CD-ROMs as supplementary teaching aid in classrooms. Others are privately run an d bank financed . Through continuous video m onitoring it was found that despite language difficulties boys and girls from th e neighbourhood developed access skills in web surfing and graphic designs even without formal training. Village Knowledge Centers have been established under this project with dedicated web sites of locally relevant information. health. have been set up to provide information on market rates of agricu ltural products. Swaminathan Research Foundation: This project is located in Pondicherry of South India.000 jobs hav e been created in cyberkiosks in India in addition to possible employment due to spillover effects . The project provides online information centers for rural c ommunities with interactive and graphic interface in some places at North India. one for a grou p of villages. SEWA has promoted online global marketing of the product s turned out by their members . gov ernance issues. 600. ‘Devel opment Alternative’. Hole-in-the wall initiative: A pilot project launched by the NIIT. a software co mpany in urban slums by providing unmanned computers. Rajasthan and Tamil Nadu . banking . which organizes poor a nd self-employed women. education. contract management. More tha n thirty Community Information Centers (known as ‘Soochanalaya’). M. call cente . According to one estimate. processing of insurance claims. The list of anecdotes included in the Box is by no means exhaustive. Apart from growth of employment and income at firm level due to ICT induced productivity g rowth in a large number of industries. a whole range of ICT enabled activities a nd services has started booming. The Foundation also di sseminates knowledge and information through wireless radios to rural communitie s . retailing etc.computer equipped with software in Indian language and other accessories to set up cost effective Internet kiosks in partnership with local service providers. 2001 and other sources. human resource services. Employment benefit of ICT occurs across wide range of skill spectrum. The Gyandoot Project: A joint initiative of the district collector of Dhar distr ict of Madhya Pradesh and the District Rural Development Agency (DRDA). preparation of payroll. located on the banks of river Warana in Maharash tra. It operates distributive accounts system for the Warana sugarcane cooperati ve. issue of certificates and registering complaints. The Warana Wired Village Project: This is a collaborative project between the ce ntral and the state government. Panchayat related matters. promoted by EID Parry. Indiagriline: This is an online network of trading. SEWA: Self-Employed Women’s Association (SEWA) is an NGO. land records. E-mail facilit ies in Hindi are available. With progre ss of connectivity such examples will multiply bringing in its train benefits of an information economy and society.
conduct of p ublic examination. promo tion of institutional finance including venture capital and liberalization of fo reign equity participation. innovation and comparative advantage. information security management and R&D support. web site services. The process of job creation and productivity growth is expected to bring about market expansion supporting growth of domestic hardware and software industries broadening the base of ICT development. systems engineering. simplification of administrative rules and procedures.000 bank branches have implemented major computerization . running of customer support centers. Ministries and departments have come up with their websites with al l the relevant details. state has been the most important source of demand for IT industr y in India. One reason is that the government has significant market presence in many goods and services. will induce R&D spontanei ty enabling India to transit from the status of an importer of sub-assemblies of IT and telecom hardware to a higher state of development endowed with strong do mestic manufacturing base of sophisticated hardware and software products boomin g from indigenous ideas. state will play an important role in this development both as a proactive policy maker and also by taking a position in the market. Major policy trust of the government to promote IT was through provision of Technology Park. allocation of Permanent Account Numb er (PAN) for income tax payers. certificates. Many state governments have also declared IT policies and computerized records. Computerisation is also spreading very fast in the field offices of the governme nt. Different ministries have been advised to earmark 2 to 3 percent of the budget on IT. Supreme Court. registration of deeds. Traditionally.000 ou t of 45. A modern telecomm unication infrastructure will accelerate this process through provision of highspeed communication links. in turn. According to one estimate. issue of licences. qual ity certification. vigilance information. The other reason is that the government is consciously promoting the use of IT in activities within its domain of activities. overseas campaign for export promotion. policies to encourage globa l presence included market support. medical transcription. This. . Indian IT co mpanies have been allowed to issue ADR/GDR linked stock options to employees und er favourable tax treatment. As in the past. conten t development and animation. Recently. schemes under i mplementation by the NGOs. Ministry of Communications and Ministry of IT have been merged to form a single ‘Ministry of Communications & IT’. custom clearance. Approval mechanism has been simplified under automa tic route permitting overseas business acquisition through ADR/GDR route. processing of passport application. systems design and integration etc. debat es and deliberations . land records. VSAT based money orders under the Department of Post. Apart from encouraging use of IT in research and scientific areas. 12. hardware r epair and maintenance. Parliament questions. significant results have already been achieved in computerization of railway reservation. Though computerization of many more areas within the gov ernment are under implementation. software development.r operations. financial and educational institutions. In the global IT market India will be a major player at the higher end of value chain based on perfect synergy between the domestic a nd overseas market. various payments systems etc. the governmen t has also taken major initiative to computerize work of various ministries and departments. Regional Transport Offices. fiscal incentives. In the area of software. The IT Action Plan on Hardware envisaged extending Export Oriented Unit (EOU) status t o hardware manufacturing units and deemed export status to telecom manufacturers . The trend continues even today and government spending on IT is a k ey driver of domestic demand for IT products. To undertake development of IT as a thrust area a sepa rate ‘Ministry of Information Technology’ was formed in October 1999.
Trained manpower will also be an important s ource of demand for IT products and services. the battle against digital divide will be won and ICT will be l everaged to benefit the poor. A recent study shows that the number of Indians using Internet for accessing government services and products as a prop ortion to total number of Internet users has increased from 22 percent last year to 31 percent this year . improved delivery in the social sector programmes. Bangalore. Availab le indications suggest that IT education is gaining popularity . Kolkata and Hyderabad in addition to Indi an Institute of Technology and Management at Gwaliar. Apart from higher earnings associated with product ivity gains and job creation. Competition Policy . Computers have also been specially designed for use in the mass market . young and old. Initiative has also been l aunched to upgrade existing regional engineering colleges. Growing legitimacy of IT based transactions in government has started catalyzing the use of IT in private market and expanding the domain of e-business and e-co mmerce reducing transaction costs significantly and increasing productivity. guidance on improved farm practices and elimination of exploitation by the intermediaries. training and skill development will meet the demand for skilled manpower of the industry and at the same time keep the cost of IT education. productivity and entrepreneurship. There will be general improvement in the qu ality of life of the poor through more responsive governance. The foundation of digital democracy has been laid to usher in an era of e-govern ance. A society has been formed to extend accreditation to instit utions at non-formal sector for certain courses and network services have been launched to link academic and research communities. The act imparts legitimacy to contract through electr onic means unless otherwise agreed.Legislative framework has been put in place with the enactment of the Informatio n Technology Act 2000 recognising digital signature as means of authentication o f government certificates. better quality of public services and more effe ctive public expenditure with more efficient targeting and monitoring. government and the g overned. organized and unorganized. servicing and m aintenance within reasonable limit. The Government has taken steps to increase the teaching facilities to double the number of technology students and sponsored training institutes like Indian Institute of Information Technology a nd Management at Allahabad. Education will spur innovation. A knowledge society will be formed with participation from the rich and the poo r. There has been substantial depletion in the stock of IT personnel in India throu gh migration into USA and Europe. benefits for the poor will also result from risk m itigation and reduction in vulnerability due to timely availability of informati on on weather and market. Educati on. Vision 2020 is a vision of IT for the masses. give active support t o the polytechnics and colleges and encourage private participation in training in the field of IT. E-educati on and e-medicine will surmount all the access barriers to reach the remote and isolated locations. Software in local languages is being increasingly available. All round development of digital l iteracy would put Indian society in complete command over the ICT tools. Indian Copyright Act of 1957 and its amendme nt in 1994 outlaw software piracy. transparency and e-accountability. There is need to replete this stock and plan f or increased availability of skilled manpower to meet the future demand. Perceived utili ty of ICT as enabler of business processes would continue to enhance market for IT education. 4. In time to come. men and women.
Competition in the fixed line segment with state owned incumbents: China . India and Si ngapore. Pakis tan and Singapore. whereas Hong Kong. Ma laysia and the Philippines. restricting the number of licensees or imposing geographic li mitations has limited competition. While Europe predominantly opted for Global System for Mobile communicati ons (GSM) technology and USA for Code Division Multiple Access (CDMA). India. Opening up of local market to competition first: Hong Kong. 3. Countries are divided in their technical options for mobile net works. Taiwan and Thailand. It is interesting to note that competing technological standards have also limit ed competitions. equipment and superv ision through Business Cooperation Contracts (BCCs). Differences i n modes of privatization have been observed in other countries. 2. 6. In Thailand. Indonesia. Simultaneous introduction of privatization and competition: Japan and Sr i Lanka. competition in cellul ar telephony was allowed in a duopoly mode. Though private sector has been licensed and they are laying infrastructure. Many countries in Asia restricted foreign equity participat ion. In most countries. Malaysia. Pakistan and Philippines. China. India. China did not allow private entry in the telecom sector and limited competition between state-owned entitie s of the ministries. for instance. Introduction of second domestic long distance carrier first: China 7. Indonesia and Malaysia have opted for GSM in cellular mobile n etwork. 4. Competition has been controlled within limit by state policy through licensin g of limited number of market players in certain segments granting thereby a per iod of exclusivity to the operators. Ja pan. Malaysia. within As ia. Basic s ervice in India is still limited to one private operator competing with state ow ned incumbents in the circles. ‘Companies like AT&T and Cingular are increasingly moving to GSM’ . This was gradually increased to lice nsing of four operators in each of the four metros and thirteen circles.Countries often differed in pattern of sequencing and the speed of liberalizatio n. In India. Korea. 8. network was publicly managed wit h foreign operators participating in provision of training. Heterogeneity of routes to sectoral reforms . For examp le. Korea. classified into diff erent combination of policies and approaches to telecom reform. the Philippines.’ India is using CDMA in Wireless in Loc al Loop (WLL). pri vate entry was allowed through Build Operate and Transfer (BOT) mode while the n etwork was controlled by the state. Multiple technological standards fragment market rendering base s tations purchased from one company unworkable with switches bought from another company potentially limiting the scope of exploitation of economies of scale tha t could accrue in a multi-vendor environment . The sector ministry exercises regulatory functions: China. in USA. metros are still in the grip of public sector monopol y and it will take a while before private competition takes place. India and Korea. In Vietnam. However. as seen from the examples of some of the Asian countries. Opening up of competition in the international services first: Korea. Singapore and Thailand have o pted for CDMA . Separate regulator with the responsibility for interconnection lying wit h the dominant operator while regulator is responsible for arbitration of disput es: Hong Kong. Indonesia. Korea. For example. several countries are now opting for more than one standards. the Philippines and Thailand limited foreign equity below fifty per cent . . China. 5. are presented be low : 1. ‘China is going with some CDMA as well. Malaysia. Privatization of state owned incumbents but deferred competition through exclusivity granted to private investors: Hong Kong. Indonesia.
starting with half of the tele-density. Experience of UK has been cited in this context. which was subsequently extended by three years.5 per cent. provided regulatory policies do no t inhibit growth of private markets in such areas. account for just two per cent. examination of the validity of such conclusio ns is not intended here. Both USA and Canada lost in terms of their mob ile tele-density-rankings in the world in the 90s. The purpose here is to cite these references. It has been observed that ‘countries with a pri vately owned incumbent operator account for 85 per cent of the world market by r evenue. Moreover. from among the member countries of the I TU. Chile surpassed Argentina in ten years’ time . Therefore. European Union has mandated a single technolog ical standard called ‘Wideband CDMA’ (W-CDMA) for 3G coverage. Two reasons which have been c ited for this are: (i) persistence with regional duopoly for too long. However. Some of the compa nies that sought to launch 3G services in September 2002 (deadline stipulated in the licenses for tdr he launch of services) faced the difficulties that networks and handsets of diff erent vendors could not work with each other. Opening up of new services not preoccupied by state monopoly can attract private investors. Argentina.The way multiple technological standards may confuse regulatory stance leading t o market failures can be seen from the recent experiences of several vendors whi le trying to launch 3G in Europe. For example. there is an observable trend of growing number of state owned teleco m incumbents being privatized. in mobile as well as fixed lines . Telecom expansion was reportedly much more rapid in the United Kingdom (i) after the expiry of exclusivity period from 1982-90. Interconnection between state-owne d fixed line incumbent network and private mobile network has been a bone of con tention in many countries. the second operator and (ii) after cable TV operators w ere permitted to offer tele-services . which often h . Chile far exceeded Argentin a in terms of network growth. The issue of granting a ‘period of shared exclusivity’ versus ‘allowing more ext ensive market entry’ has been discussed in the literature. which is working successfully in Asia and USA could not be adopted in Europe because European operators did not have freedom to use ‘CDMA2000’ as per their l icensing restrictions . and (ii) slow transition from analog to digital systems . that was granted to Mercury. Notwithstanding the merits of the above conclusions whatsoever. but granted sevenyear exclusivity period. ‘CDMA2000’. Those with fully state-owned operators. Growth of private mobile oper ators in India is a case in point. Which competition policies worked better than others? Literature cites certain d evelopmental experiences to draw conclusions from ‘before and after’ and ‘with o r without’ evaluations. Argentina imposed licensing obligation in terms of stipulated growth rate of 6. another standard for 3 G. Operationalisation of these ideas is not without hazards. it was concluded that open com petition was better than duopoly. on the other hand. Competition with privatization World over. In 2000. In the abs ence of more detailed information. ‘…incumbent telecommunication operator. those with fully or partially privatized incumbents outnumbered countries wi th fully state-owned operators . it can be argued that privatisation of existing state-owned incumbent operator is not the only w ay to promote private investment. Moreove r. In the decade following privatization. privatized in 1990.’ It has been suggested that privatization with competition works better than priv atization without competition. A conflict of common occurrence relates to interconnection issues. Chile started privatization in 1988 but did not limit competition through grant of exclusivity period or licensing o bligations. it is necessary for the regulatory a uthority to ensure that state incumbent does not inhibit growth of competition .
one of the world’s major Public Telecommunication Operators (PTOs) is still fully state-owned. Participation of foreign investors has been allowed through joint ventures. telecommunication development’. Independent regulator? Sound regulation is a pre-requisite to healthy competition. in an orderly manner. TRAI had a proven rec ord of maintaining neutrality. Therefore. . there are instances of ‘independent regulators that ha ve been captured by market players’ . Thus. It had challenged several decisions of the Govern ment of India . A separate Tel ecom Disputes Settlement and Appellate Tribunal (TDSAT) was set up with both ori ginal and appellate jurisdiction. What about non-sector specific regulation? New Zealand experimented with non-sec tor specific regulation relying on Competition Commission of the country. re commendatory functions were separated from enforcement functions. base d on convergence. the carri age and content of communications (including broadcasting. Direct appeal to the Supreme Court of India against an order of TRAI was prov ided for. ‘The Bill aims at promoting. however. It also seeks to provide a choice of services to the people with a view to promoting plurality of news. Thus. there are other models of competition without privatization. it is difficult to perceive indepe ndent regulation as synonymous with impartial regulation. In tune with the international development and evolution of technology. There are examples of effective regulation under regulatory functions being performed by the governmen t departments. neutrality of Indian telecom regulatory regime was ensured throu gh reliance on multiple agencies for conflict resolution . It became mandatory for the central government to seek prior recommendations of the TRAI before introduction of new services. The autonomy that a regulator enjoys from government control has often been given primacy over many other factors in determining a regulator’s ability to discharge regulatory role in an impartial manner. inter alia. Both these countries have been very high achievers in terms of progress of telecom sector . Finally. and to enable access thereto. issue of competition cannot be divorced from the issue of regulation. The Comm unication Convergence Bill 2001 was introduced in the Parliament and is under co nsideration of the Standing Committee of Parliament on Telecom and IT. typically at a high multiple of the actual co st’ . ‘The key underlying factor is the will of the state to invest in. TRAI Act was amended in January 2000. In India. and prioritize. Similarly. In reality. Competition has been allowed between ministries of the governments. Chin a Telecom. facilitating and developing. protection of interes ts of service providers and consumers of telecom sector. to facilitate development of a national infrastructure for an inf ormation based society.olds a monopoly…can set the price. Competition without privatization Interestingly. With this amendment. to remove some of the shortcomin gs observed earlier. telecommunications an d multimedia). vi ews and information’ . Both China and Vietnam followed similar policies of co mpetition without privatization. which apart from paving the way to a full-grown information so ciety will enhance growth and productivity of telecommunications and IT through exploitation of economies of scope and coverage. TRAI’s power to issue directions was restricted to only its enforcement function s. New Zealand enacted ‘Te lecommunication Act’ in December 2000 and created a Telecommunication Commission within the Competition Commission . The legislation aimed at. regulatory regime in 2020 will be overarching. This l ed to protracted litigations and disputes on interconnection and network access issues slowing down the progress of the sector.
4 (for instan ce. co nsistent with this process of evolution. there would have been hardly any growth in telecommunications in many countries. From the perspective of business or ganisation. in mob ile handheld devices. Network operators and service providers will have to merge with cont ent developers to add value to their services. The ratio rose to over 90 per cent by end-2001 . mobile handsets and calling card s have made virtual presence possible almost everywhere and anywhere overcoming the barriers of distance. There has been phenomenal growth in mobile subscribers in the world in the ninet ies. Investment worth several billion dollars were sunk and lost in the Iridium Global Mobile Persona l Communications by Satellite (GMPCS) network project. In Norway. Market failures of such magnitudes create backlash in the industry and c an potentially risk a global crisis. Similarly. Despite differences in competition regimes across the countries. In developed countri es. both web based and real time video streams. topography and remoteness. Consider ing that the fixed telephone lines numbered just over a billion in this year. A calibrated app roach through managed competition holds assurances for the investors of a reason able time period for consolidation and therefore. license to provide 3G mo bile services purchased for US$ 22 million was returned unused. mobile phones have complemented fixed lines whereas in many developing count ries with low-level fixed line penetration. But for expansion in mobile network. this process is likely to undergo an alternate cycle of differentiation and convergence. India in 2020 will see competition among b ig firms offering innovative value-added services to capture market through crea tion of new digital needs and priorities. This is likely to create temporar y oligopoly in the market till competition intensifies with the emergence of mor e firms offering multiple services . it is likely that mobile phones would surpass fixed line in 2002. increasing from 11 million in 1990 to 941 million by the end of 2001.There have been instances of repeated market failures arising out of impudent in vestment decisions of the private operators. 5. less than one per cent of the world population had a mobile phone. Mobile telephony has emerged as the major growth dr iver in this sector. Convergent nature of tec hnology may. would prove too costly in terms of lost investment in a country like India. mobile subscribers outnumber fixed line subscribers in mo re than half the countries . It is interestin g to observe that China has surpassed USA to become the largest mobile market of the world. as the global experience suggests. In 19 91. The propo rtion has grown to the vicinity of one phone per every six people by the end of 2001.000 km fiber optic network . Such failures. The most recent initiative aims at convergence of voice and data re ceived from multiple sources. with her commitment t o reforms is already a part of this process. Global Crossing went bank rupt with debts over US$ 12 billion for a project of construction of 160. It has been observed that ‘the ability of a country to grow its mobile network to t he point where it overtakes the fixed-line network is not a function of its weal th…the crossover point can come as low as a fixed teledensity of 0. Regulatory environment will mature to allow maximum flexibility and freedoms to encourage innovation and expansion. Technology trend Broadly speaking. seems to be a wiser strategy t o follow. by itself dictate mergers and acquisitions between companies in cer tain cases. if not avoided. the global tren d is towards growing privatization and competition. mobile has already surpassed fixed l ines filling up supply gaps created due to inadequate growth in the latter. In Africa. technologies of mobile telecommunications and Internet are goi ng to set the contours of further technological progress in the current decade a nd the next. in Malwai) to as high as 75 (the case of Luxembourg) and at any point in bet . One view is that too many competitors deciding ‘to build e normous networks for which there was little demand’ were responsible for such cr ashes . Global satellite systems. one-third of the total number of countries of the world had cel lular network in 1991. India.
Technological answers to these problems have already emerged in the forms of Integrated Services Digi tal Networks (ISDN). Digital lines in proportion to total number of main telephone li nes have increased from 87 per cent in 1995 to 99.4 million. It is also interesting to note that in 1995 Internet users in developed countries were seven times more th an the number of Internet users in the developing countries. There are t hree important implications of this development. Use of VSAT technology for Internet connectivity can also greatly enhance the speed of data transmission . This is still lower than the average of 24. First. ‘Incumbent telecom operators tend to be among the largest Internet Service Providers (ISPs) in their countries’ . By March 2002. the last decade witnessed phenomenal growth in Internet usage. Initial stance of technology supporting expansion of Internet dictated revenue m odel based on convergence between telecom and Internet. this gap h as narrowed down to less than four times. Cellular subscribers in proportion to total number of telephone subscribers (basic plus c ellular) has increased from 0. In 2 001. One would expect a rapid growth in mobile telephony in com ing decades.ween’ . At the e arly stage. Internet is accessed pre dominantly through dial up in old telephone lines. 95 per cent of the countries were connected to Internet compared to 15 per cent in 1990. Cellular mobile telephones subscribers in India increased from 77 thousand in 19 95 to 3. 52. First. The issue that confronts developing world is how to create demand for broadband applications at the first instance. technical capabilities of telephone lines constrain deve lopment of Internet infrastructure and conditions speed of download. it is bringing along with it all concomitant economic benefits of enh anced telecom accessibility. Third. it has grown to 6. which include Digital Subscriber Lines (DSL) and cable modem. Second.6 percent in 2002.2 percent for highincome countries. Second. diffusion of this technology is so far minimal. wireless solutions and upgraded cable television networks e nabling high-speed Internet access without clogging telephone lines. deve loping countries are faced with major bottlenecks in the spread of Internet due to shortage of telephone lines and high telephone charges. In 2001. telecom operators are. There are three important economic implications of mobile explosion for the deve loping countries. Thi rd. it is promoting a better entrepreneurial cu lture and supporting employment generation through proliferation of kiosks . The reason is that they control the pipes o ver which Internet traffic runs’ .8 percent for upper middle-income countries and 50. India has also achieved significant quality upgradation of its netw ork in the 90s. by offering a viable techno-economic alternative it is helping in improving telecom penetration bypassing shortages of fixed lines. Commercial exploitation of Internet crucially hinges on the spread of broadband technology.6 percent achieved by the low-income countri es in 2001. The corresponding ratio for lower middle-income countries is 41.6 million in 2000. one would hope to see faster expansion and consolidation of these technologies ushering in Internet revoluti on. Broadband access technologies. there has been a shift in investment burden from state to private sector and the consumers . It has been observed that while dotcom operators ‘are failing to make money on the Internet. This has resulted in unequal distribution of benefits between the dotcom operators and the telecom operators. Con sequently. Like mobile. In the present decade and the next. There are about half a billion Internet users in the world in 2001 with subscribers numbering an estimated 230 million . it inhibits growth of co ntent development as an independent specialized activity because revenue-share o f the content developers depends on the first claim on revenue by the infrastruc ture providers. particularly in th e developing countries. government can play an important role to promote broadband usage in . India is yet to experience mobile explosion of the scale other countries have seen.6 percent in 1995 to 14.8 pe rcent.8 percent in 1999. However. permit faster download and graphic-intensive Internet applicati ons.
As a preparatory groundwork to usher in 3G. At the uppermost end of the convergent technology spectrum have already emerged Third Generation (3G) mobile devices with the capability of access to mobile dat a and voice . Developin g knowledge based industry to provide mobile applications would reduce uncertain ties regarding return from private investment in 3G technologies. . revenue from SMS contributed a growing share of mobile revenue. By 2020. the drive for 3G in Indian market can come from ‘corporate roaming tr affic via international visitors’ . Substantial work needs to be done in developing 3G relevant contents so as to ex pand its market. new entities.. one would expect 3G to be within reach o f wider section of Indian population. Sonera (formerly Telecom Finland) has already launched information portal for mobile phones including Internet localisation services . inter al ia. Advanced plans are necessary to develop vibrant industries for 3G applications.e-education.. the market demand for higher bandwidth data. There is need for further work to match regulatory perspectives emerging as a pa rt of the convergence regime with the requirements of 3G. GPRS etc. Technical and commercial consolidation is exp ected to take quite some time. Another convergent trend that has emerged is the use of Internet as carriers of voice. More than US$ 100 billion have been spent by the industry since 20 00 to acquire 3G license and spectrum.a transi tion from time dependent billing model to content dependent billing . to be carried as Voice over IP (VoIP)’ . The revenue model in the telecommunications sector is going to change significan tly in times to come. Consequently. i. For exampl e. This may call for investments. Another important area of work will involve further thought over efficient billing model ---. Future work in this ar ea will be in the form of adding more value to the new services.e. Countries shoul d envision new partners. Multimedia service providers w ill emerge as important shareholders in the network value chain. ‘increasing share of voice traffic shifted to the Internet. Since it is likely that both these solutions would ultimately support fixed and mobile applications. In the Philippines. it is essential to demarcate areas w here massive harmonization efforts would be needed. While pent up demand for emerg ing data-needs can be met by using 2G systems like Short Message Service (SMS). Harmonization woul d also be needed between the two emerging varieties of CDMA. There is need to develop deeper understanding of the evolution of new end-users in the market for the mobile multimedia services. and new stakeholders in the business mode ls. Multimedia portals will be important components of such business models. Initiative has already been launched in these areas. SMS proved to be much cheaper than voice call . e-medicine to stimulate its demand . a global leader in SM S use in mobile handsets. A synchronized growth of user industry and 3G tec hnologies would ensure that pay-off period in investment is minimized. In many cases PTOs have started offering free Internet to augment revenue from telephone lines . This would entail upgrading hardware and software for high bandwidth multimedia services. wideband CDMA that also supports fixed network and CDMA – 2000. a full-grown market is yet to de velop to assure investors’ return. e-governance. a marria ge of the two would prevent technological fragmentation of the market. The pace at which 3G is going to proliferate in India will depend upon. There is a view that perhaps th e present demand for high speed data (greater than 64 kbps) can be met cost effe ctively with General Packet Radio Service (GPRS). However.
The process of commercial consolidation will start the reafter. Mobile experience of the low-income countries bears testimony to th is process. A mobile revolution is in the offing in India. The vision is n o doubt optimistic. It will take time for the market for new technologies to consolidate. there is hope for narrowing down of digital-divide. It is but natura l that markets in high-income countries saturate while expansion in developing c ountries continues unabated. India will mi mic the most sophisticated telecom technology of the world and face all types of uncertainties that are associated with any new technology anywhere in the world . It has been cited that some twenty years ago Tokyo had more telephones than the whole of African continent whereas today Africa has more tha n twice the number of main telephone lines than that of Tokyo . What will be the telecom scenario in India in 2020? To look forward. pro vided. market for Internet in the developing count ries is yet to mature though the service commenced in late 1960s. This is going to take some time because this is yet t o occur even in high-income countries. Similarly. Today’s market does not guarantee ‘reliable reven ue stream’ to investors in new technology like VoIP. One notable break with the past is that with opening up of the developing econom ies and widespread sectoral reforms. commercialisation of cellular mobile telecommu nication services began in late seventies. LDCs surpassed emerging countries achieving t he distinction of fastest among the three . a process of diffusion will continu e unhindered in respect of established technology in the mass market. and between mobile and fixed-line Internet . from now on. growth in total telephone subscribers per 100 inhabitants of the LDCs surpassed that of the developed countries. As rightly observed. bradband and 3G since they lack an existing client base . three out of four fixed lines were installed in developing countries. as an integrated communicati . The process of technical consolidation an d system integration of different competing standards in a single platform will by itself take some time. In order to guess the time frame over which such technological and commercial cy cles may run their courses in future it may be of interest to look at the past e xperiences. India is a participant in this global process. Man y developed countries have reached saturation point only now though developing c ountries are far from it. Similarly. the full extent of their impact on businesses and consumers is probably still to come. China alone installed more fixed lines in 20 00 (35 million) than the entire developed world in 1999 and 2000 . Side by side. the true potential of a mobile phone.6. In 2001. ‘Market maturing’ will be a continuous process at some of the segments of telecom sector . Going by the history. the growth momentum in the expansion of fixed line network is likely to be sustained. In 2000. when USA took the lead in 1969. This holds good even today. E -commerce. Conclusions LDCs are experiencing fastest growth in telecom network. catching up process has become faster. is still in relative infancy and is expected to boom in coming years as “old economy” firms re-orient their business processes around i t. when Japan took the lead in 1979. There is tremendous a ppetite to absorb new technology. Given the relationship between telec om expansion and growth. Indi a is still much below the crossover point even by the standard of the low-income countries. Once fixed line market is matured. LDCs are able to sustain growth momentum in the long run. mobile will crossover fixed line market. ‘But for both these innovations. At the higher end of the market. In the mid-90s. Deve loping countries with liberal policies have much better opportunity to leapfrog than before. The next points of crossover will be between data and voice . for instance. This is the current phase of expansion devel oping countries are passing through.
digital Public Mobile Ra dio Trunked Service (PMRTS). 6. including circuit and/or package switches that meet certain required standards . Appendix Indian Telecom Sector: Recent Policies 1. VoIP. ICT will spread among the masses and will spur innovation. its funding and administration. 3. 10. 4. Two telecom PSUs. the young and the old. one each in four metros and thirteen circles. The Communication Convergence Bill 2001introduced in the Parliament on A ugust 31. is only beginning to be realized’ . The cellular operators ha ve been permitted to provide all types of mobile services including voice and no n-voice messages. fourth cellular operator. towers. National Long Distance Service (NLD) is opened for unrestricted entry. Though there would be always a small niche market in India. 9. 5. 13. both Satellite and Landing stations for submarine optical fiber cables. data services and PCOs utilizing any type of network equipment . which include Global Mobi le Personal Communication by Satellite (GMPCS) Service. the rich and the poor. Wireless in Local Loop (WLL) has been introduced for providing telephone connections in urban. Future vision of telecom is a vision of IT. consolidation and expansion of evolving technologies across the length and the breadth of the country will follow with a lag. VSNL and HTL have been disinvested. has been permitted. it would be reasonable to hope that by 2020 India would complete transition into digital switching and transmission. 8. Internet Service Providers (ISPs) have been allowed to set up Internatio nal Internet Gateways. Two categories of infrastructure providers have been allowed to provide end-to-end bandwidth and dark fiber. broadba nd and 3G. the organized and the unorganized and the government and the governed. 14. If past trend were any guide. Voice Mail/ Audiotex/ Unified Messaging Service. All the villages shall be covered by telecom facility by the end of 2002 . Steps are being taken to fulfill Universal Service Obligation (USO). Telecom will be the springboard of f uture expansion of IT heralding in an information society. The basic services are open to competition. An expanding domestic market will deepen the synergy between the domestic and the export mark et and strengthen India’s presence in the high-value segment of the global trade and investment. Guidelines have been issued by the Government to open up Internet teleph ony (IP). The International Long Distance Services (ILDS) have been opened to comp etition. 1999 in several new services. semi-urban and rural areas promptly. A decision to permit Mobile Community Phone Service has been announced. . 2. In addition to the existing three. Policies allowing private participation have been announced as per the N ew Telecom Policy (NTP). duct space etc. 12. ICT benefits will spread among all. which wo uld catch up with the cutting age of the technology. 15. the men and the women. Multiple Fixed Service Providers (FSPs) licensing guidelines were announ ced.ons. entertainment and positioning device. entrepreneurship and growth. 7. 11. 2001 is presently before the Standing Committee of Parliament on Telec om and IT. right of way.
Foreign Direct Investment of up to 100 percent permitted for the following: Manufacturing of telecom equipment Internet service (not providing international gateways) Infrastructure providers (Category I) E-mail service Voice mail service Call Centers and IT enabled services 2. Foreign Direct Investment of up to 74 percent permitted for the following: Internet service (providing international gateways) Infrastructure providers (Category II) Radio paging services 3. Automatic approval for technology fee up to US$ 2 million. Full repatriability of dividend income and capital invested in the telecom se ctor 7. Foreign Direct Investment of up to 49 percent permitted for the following: National long distance service Basic telephone service Cellular mobile service Other value added service 4.Investment Policy Framework 1. Status and Trends). both published by the Department o f Telecommunications. Fiscal incentives and concessions for the telecom sector: Amortization of license fee Tax holiday Rebate on subscription to shares/debentures Scope for tax exemption on financing through venture capital Import duty rates reduced for various telecom equipment Source: (i) Annual Report. Additional foreign investment through holding/investment company 5. . Ministry of Communications & IT. royalty up to 5 pe rcent for domestic sales and 8 percent for exports in telecom manufacturing (hig her amount through specific approvals) 6. Government of India. 2001-2002 and (ii) Indian Telecommunication Statistic s 2002 (Policy Framework.
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