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Global Telecom: What Customer’s Want?
Bell’s Monopoly breakup in 1984 has changed the global telecom scenario by bringing the world more closer. Research and Development’s (R & D) increased emphasis on miniaturization, portability and wireless communications trigger the growth of wireless phone user’s globally outnumbering the fixed line user’s in 2004. Economic upsurge in customer spending coupled by low barriers to market entry with strong competitive pressure from large number of service provider, advances in mass production of cheaper handset, networking components, and optical fiber cable (OFC) is changing the telecom industry rapidly. Brazil, Russia, India and China (BRIC) has a population of approximately 43 % (2.65 Billion out of 6.13 Billion) of world population. Also they are occupying approximately 25 % (38,482,967 Sq. Km. Out of 150,047,650 Sq. Km.) of world land, BRIC nation has strong potential for penetration of basic Telecom, Internet and Media services in more dense urban and semi urban areas. Customers today are more aware of global trends, Technological advances and marketing tactics adopted by companies through cheap Media Communications. To make Knowledge based world Customers are expecting following things from Government, Telecom Service provider and handset Manufacturer.
A) Expectations from Government:
1) Fuel the Competition by Deregulation:
As per the WTO agreement on basic telecommunications, 69 member Countries have to open their territories for Basic telephony through Deregulation of home market so that foreign telecom players can expand available telecom services better than the competitor’s to develop unexploited Markets. Competitive environment will allow the level field to telecom operators and help them to understand the Operational efficiency, after sales service and quality issues in delivering differentiated low cost Telecom services. This will definitely provide a wake up call to telecom service providers, which are forcing the Customer’s to pay much more for their inefficient management of available resources. 1
The cost of desktop Computer powered by Intel’s Pentium 4 at the launch six year ago was $1600. Now the same computer having twice the clock speed is available at $400. IC manufacturing Technology has changed substantially but the major driving force is Advanced Micro Device’s (AMD) competition with innovative products. Traditional role of Intel as a bully was under threat when steadily AMD provided an innovative high-speed processor by restructuring the Operational and Marketing efficiency. Upgraded AMD Microprocessors fit into the same socket of old Motherboard, by reducing the cost of Motherboard replacement while PC up gradation. AMD with the acquisition of ATI Technologies can utilize the experience in semiconductor Chip Manufacturing to design a high speed low cost Microprocessor Chipsets to be used in cell phone and handheld devices.
2) Promote Commercial Satellite Communications:
Satellite Communication Commercialization has a high barrier, as this is Currently used by militaries for secure Communications in troubled part of the world facing terrorist related activities. With satellite Communications the cost of service does not increase with the increase in distance between the sending and receiving station. Satellite Communications is Useful in remote, sparsely populated areas, rugged mountainous terrain and large geographic areas as the low subscriber density cause a high construction cost of land based Network. The Satellite earth stations can be deployed much more rapidly to offer international services. Technological advancements and Capital equipment upgrade will build in infrastructure to support for increased demand in telephony, Entertainment signals (TV. Radio, Video Distribution) and broadband Internet by deployment of IP Over Satellite through Bandwidth. The Satellite Communications can eliminate the land based network operator, multiple carriers, their dominating attitude and the billing cost. Global Positioning Systems (GPS) is satellite based navigational system uses constellations of 24 orbiting satellites and Customers can access the signals free of cost on their navigational equipment provided by Garmin Limited. The Satellites, ground control and monitoring stations are maintained by United States Department of Defense. The Mitsubishi Electric’s commercial Satellite platform DS 2000 feature is useful for Communication need of society. This satellite has a solar power panels, panels with built in cooling pipes and Lithium ion batteries ensure an orbital lifespan of more than 15 years, which is suitable for extensive commercial usage.
3) Demilitarizing Spectrum and Allocation Method:
Next generation network and telecom services are not implemented in most of the country’s due to saturated networks and unavailability of spectrum as it is occupied by Government for Military applications. The Government should demilitarize the spectrum band in which the handsets are amply and readily available with the economy of scale. Otherwise the nonavailabilty of handsets at a particular frequency band will definitely affect the customer and telecom service provider.
Auctioning of Spectrum for a short term gain to government through revenue will force the telecom operator to run for their own money by high tariff for services hindering the growth of telecom penetration having a long lasting effect on economy due to their high investment into a network up gradation, Spectrum licenses and regulatory compliance. The Government Should collect a Spectrum usage fee based upon the subscriber base OR a certain percentages (%) of total revenue. The Government should establish a telecom billing company to avoid the telecom billing fraud, and overcharging by telecom operator. This will helpful to government for royalty calculation, to understand their business practices and utilization of resources. Government’s focus on the strategic allocation of scarce spectrum will highlight their policies and planning for future growth. Equal spectrum is need to allocated to the number of available player’s. If any telecom service provider is not utilizing the allocated spectrum efficiently then virtual telecom service provider is allowed to use the Spectrum and existing network of that telecom operator to provide the value added services.
4) Legalizing VOIP:
Even if it’s invention in 1995, diffusion of innovation of the IP telephony is restricted in most of the countries to protect a fixed and mobile telephone companies. As VOIP router can route Voice over data Network’s Bandwidth with packet switching by saving individual customers and business up to 90 % off traditional circuit switched network’s long distance rates if migrates to IP Network. Digital phone with IP based telephone Switch can be used for IP telephony over IP Network. IP telephony offer’s a cost savings, productivity gains, data encryption, reliability and quality to customer base. Legalizing VOIP will increase the penetration of Internet through expanded communication by email, Internet Chat, Web call back request and VOIP. Cartes Bancaires LLB group, which manages France’s Bank Card Payment System, is using Thales Group’s technology to secure the French banking network’s IP Communication Infrastructure.
5) No Import and Antidumping Duty on Quality Optical Fiber, Network Components, Laptops and Mobile handsets:
Imposing an antidumping and high Import duty on a quality Optical Fiber, Network Components, Laptops and Mobile handsets is an apprehensive measure to protect the inefficient home industry. Import and Antidumping duties increase the cost of wide range quality equipments by acting as a barrier to the aggressive penetration of telecom service. Government rather sitting on a hefty Foreign Exchange reserve be use it for funding state owned telecom companies to replace a traditional copper wires with Optical Fiber network. This will create a bandwidth expansion, which can be used for militaries secure Ultra broadband for data and voice Communication applications. Additional Bandwidth can be used for offering it on lease to private operators and free bandwidth to Educational institutes, health Centers, etc. The Internet can transform teaching, e learning by nurturing the talent with the help of massive information base available on worldwide web (www). 3
US Government’s decision to provide the $100 laptop to children from underdeveloped countries is a right decision as investment in education can uplift the community socially and economically.
6) Local landline and Mobile number portability:
In absence of Number portability the customer don’t have any option but to stay with the errant telecom service provider due to considerably high switching cost. Local landline and Mobile Number Portability will allow the wired and wireless telecom subscribers to select the efficient service providers offering attractive low cost quality multimedia telecom services by keeping the existing telephone number. Telecom operator has to invest in network up gradation. Attracting and retaining price sensitive customer will be very difficult in Number Portability regime. The Customer Churn rate fuelled by Number Portability becomes a wake up call to telecom service provider to provide a quality and innovative services at competitive prices.
7) Research and Developments (R & D) to understand the effect of RF on Human life:
Even if it’s not scientifically proved that a high power RF waves cause a Cancer, Vision loss, health risk to children. The Government should undertake a collaborative research and development (R & D) with multiple nations to understand the effect of RF on Human life. R & D will increase a safety of customer and performance standards for mobile communications. Government should follow a stricter rule to comply electromagnetic compatibility of electric wave emissions from handset’s and base stations.
8) Political Will:
If political vision matches that of national vision then the growth of the nation was unstoppable. Political opposition, bureaucratic hassles, corruption increases the barriers and affect underdeveloped countries in attracting FDI. Policy adopted by the Chinese Government is making it a most happening country in the world. From gaining an investor confidence to maintain a growth rate through domestic consumption and export, steady investment in world-class infrastructure development for improving the standard of leaving with steps to enhance competition. Chinese politicians are preparing the nation for future growth by fast and decisive action to address the challenges in economy.
B) Expectations from Telecom Operator:
1) Select Right Technology:
Telecom operator can choose the GSM or CDMA Technology, as ultimately cost to customer is depend upon the selected technology for telecom services. GSM technology has a faster time in networking operations and time to market the services. CDMA does offer an effective spectrum efficiency and far better distance coverage than GSM but practically it is not that achievable due to various reasons. 4
GSM technology has a variety of cheaper handsets due to large production delivering an economy of scale. CDMA handset manufacturers are dependent upon QUALCOMM for getting the chipsets for manufacturing handsets and they have to pay a license fee as the technology is patented by QUALCOMM. Also the CDMA telecom operator has to pay a royalty for using the technology for providing the telecom services. Biggest advantage of GSM technology is Customer’s can switch from one GSM operator to another GSM operator keeping the same handsets but that was not possible in CDMA as the handset may not be adaptable on other CDMA network. CDMA telecom operator are customizing their networks as per operational requirement, which did affecting the handset manufacturers as the market is divided into so many technologically different needs of customer by affecting a economy of scale in production. Because of this and other reasons NOKIA has decided to concentrate more on a GSM handset manufacturing creating a big vacuum for quality CDMA handset. Even if NOKIA manufactures only Dual mode (GSM & CDMA) handset the high cost will be a deterrent to customers. Now for getting third generation services WCDMA phone prices over higher than worldwide average CDMA2000 phone prices. In fiscal year 2004 QUALCOMM Invested $720 Millions (15% of total Revenue) on research and development (R & D) and they receive $1366 millions (28% of total Revenue) from Handset manufacturers and CDMA telecom operator as a royalty and license fee for technology use. Beside this QUALCOMM has a discriminatory Royalty method as they charge 7% from India, 2% from china and 0% from USA telecom operator’s using the patented CDMA technology. Even if QUALCOMM is investing aggressively in telecom operator as a marketing strategy for CDMA technology expansion following factors will restrict the growth of CDMA technology. a) Discriminating Royalty, license fee will turn away a business partner as they will get a heat of rising prices as compared to low cost GSM services, handset and Business partner’s also know company shareholder concern for Profit and Dividend. b) Unavailability of cheaper Quality Handset due to QUALCOMM inability to deliver number of required low cost chipsets. c) Lower number of network equipment provider and networking companies sitting on fence, as they are unclear of technology of future. d) CDMA customer has to purchase an economically unviable high cost Dual mode (GSM & CDMA) Handset for international Roaming Practices.
2) Customer Service:
Telecom Operator’s long-term ability to deliver quality customer service is necessary as a one dissatisfied customer turn away a 10 prospective customer’s to competitor. The telecom operators are devoting their resources to increase the customer base. Customers are face numerous problems like network signal, Call lost, inflated bills, Disconnection of services etc. After sales service to huge customer base is difficult as their expectations are high and servicing them with inadequate manpower resources and infrastructure increase their dissatisfaction.
The delay in handling escalated customer complaints from 24/7 call center fuel anger as a long chain of complaint handling process coupled with lack of technical knowledge and decision making power increase their irritation. The 24/7 call center employees need a commitment to deliver with transparent, effective, efficient and fast business process having shortest decisionmaking route. 24/7 Call center needs a key personnel management to attract, teach, and retain to service customer reducing the churn rate of telecom customer and employee turnover, which has an industry average of 40%. Employee frustration, stress of achieving a high workload and unrealistic targets under tremendous time pressure would pass onto customer by aggressively hiding information for company gain will affect the company in long run as well may ruin the employees own personal life. For efficient customer service telecom operator should encourage employees to come up with a distinct innovative ideas. If telecom operator is promoting the handset by co-branding with handset manufacturer then telecom operator has to monitor the operation of service center for availability of spares (PCB, Battery, Speaker etc.), qualified workforce and pricing of spares to avoid any escalated complaints. Deutsche telekom, NTT DoCoMo has a lowest churn rate of customer’s, as they are investing in future R&D applications to develop new and innovative business practices. They Conduct Customer satisfaction survey every week to find out the customer need assessment, Complaints and satisfaction level as their home market is nearing to the saturation level.
3) Network Up-gradation:
Telecom service provider rip the benefit of money invested in the network infrastructure as per their technological life span. Up-gradation of network elements is necessary to accommodate large customer base by increasing cost effectiveness through spectrum efficiency and to increase a competitive advantage. Intra and Intercity network of optical fiber which act as a primary backbone and latest switching products enable Broadband Internet, Voice telephony and data applications traffic to be seamlessly carried over the network with full efficiency. Lower cost, high speed offering from cable operators, large carriers and Internet service providers (ISP) created a competition to telecom service providers. Customers are expecting that cable operators, large carriers and Internet service providers (ISP), and telecom operator should differentiate their services by providing very capacity fiber optic connections directly to home or at least to the node close to home. Customer usability of latest handset features is limited because of network functionality did not support the handset functions. Network security is essential as virus, spams, worms and spy ware in telecom network and handset may cause the phone unusable. Nationwide network of base stations, will provide a quality services by consistent network signal, call lost etc. the solar power or wind energy need to be used for powering the base stations. Signal strength in office building, underground subway, auditorium, basement, moving trains, highway need to be improved, to avoid the dissatisfaction of customer. In building signal coverage s often poor but with the Internet protocol network it is possible to connect cellular phones by low power radio signals.
WiMAX (Worldwide interoperability of Microwave Access) is an extremely efficient wireless networking that expands the coverage area well beyond that of WiFi (Wireless Fidelity). WiMAX permits the transmission of data for miles without interference of obstacles. Moscow city has more than 1000 Km. Of optical fiber network.
4) Tariff plans and Bundling of services:
Increased penetration and uses possible through cost reduction in rentals, monthly package rates and decline in per minute pricing. Subscriber base and not Average revenue per user (ARPU) be considered for the network and operational efficiency. There should not have a substantial difference between the prepaid and postpaid tariff plan. Migration from one plan to another is allowed to reduce the cost of services to customer. If telecom operator has a national operation then customer should not charged high for incoming and outgoing calls. The total concept of roaming is absurd if the telecom operator has a national operation because it will not add any additional cost on network to forward or receive calls. Telecom operator should provide the customer with the unlimited calls within a home network, reduction in interconnect usage charges and flat rate for bundling the services not only for business but also to home users. Telecom companies bundling strategy is useful for consumer retention by offering broadband Internet, Phone and Entertainment signal. All the three services are possible through single backbone i.e. Wired, Wireless or through Satellite communication by lowering cost of services. Large carriers, cable operator, Internet service providers and telecom operator can provide the services as they have a large infrastructure and reach to the customer’s household.
5) Protecting customer information:
Telecom operator has a data of millions of subscribers and they should protect the customer information like name, telephone number, address, income etc. these information need not be used for the marketing activities of group companies like insurance, bank. Telecom operator should have stringent security management and employee education for theft prevention. This information can be used for activities like extortion, direct marketing of bank, insurance, mutual fund and IPO selling. Telecom operator using the subscriber’s for commercial advertising should first take the permission of customer and share the revenue generated through advertising by sending SMS, MMS, unsolicited emails, which infringe the privacy of customer. Employee has to sign a confidential agreement with company to protect the essential customer information and trade secrets. Some one tries to sell the Coca Cola’s trade secret of new soft drink to its rival PepsiCo. Alert PepsiCo informed the investigative agency and Coca Cola, keeping a highly ethical standard of business practices.
6) Community service:
Telecom operator has to educate the subscriber about the mobile manners in education complex, public places, multiplexes, driving and hospital. Using mobile in hospital as they 7
interfere the operation of medical devices through constant emission of radio magnetic waves from mobile handsets. Telecom operator should have lower tariff plans to children, aged and disabled people. Educating the dealer network, agent to ascertain the need of customer to provide the right tariff plan by verifying their documents as prepaid connection is mostly used in crimes. Telecom operator should help charities, students by sponsoring scholarship, cultural and sports festivals, maintaining Neighborhood Park, Road up keeping by cutting expenditure on paid and strictly no political contributions.
C) Expectations from handset manufacturer:
1) Quality handset:
Handset manufacturer has a area of concern as a Technology change, Short product life cycle, Rapid product obsolescence, Evolving technical standards and Wide fluctuating product supply and demand causing a industry downturn and production overcapacity. Some handset manufacturers top management think of high application mix, low volume is the best way to success in volatile telecom handset market. Such hidden agenda may mar their ability to compete in long run as the economy of scale is not achieved causing a high cost to end user. The next generation communications devices should have an economy of scale in large production volumes, competitive pricing, high reliability, consistent quality and reduction in size. Handset market is divided into 3 categories as given below.
Global Handset Market Share
High Cost (Smartphones) 10%
Cheaper (Voice Applications Handset) 40%
Cheaper (Voice Applications Handset) Medium Cost (Multimedia Features handset) High Cost (Smartphones)
Medium Cost (Multimedia Features handset) 50%
Customers are expecting a programmable chip so end customer can reprogram them to add new features. It is possible to reduce cost and power consumption by more efficient powerful digital signal processing (DSP) algorithms implemented in silicone embedded microprocessor to provide a multiple applications in a single device.
Quality management is a big issue, as the low quality handset owner has to pay at compound rates in the long run for servicing the handset problem. Samsung has developed a 32 GB flash memory based upon 40 Nano technologies for wide storage of data in portable devices. Sophisticated innovation in laser technology can be used for PCB, Spare cutting and Packaging technology to integrate active, passive, signal processing components having high frequency, power for portable devices. With the help of Dassault systems 3D technology, mobile designers can design and modify the outer look for greater handset success. Organic LED display is very useful for lightweight portable devices as they have a very high brightness, wider viewing angle, reduced power consumption and lower cost of manufacturing. Power efficient linear circuits for portable battery powered systems can be readily designed with the cadence software and manufacturing at a state of the art low cost facility at Taiwan, Thailand, Singapore, South Korea, Malaysia and China.
2) After sales service:
Customers face so many problems in handsets like display, sound, battery, Chipset’s related problem in PCB and software up gradation. The handset’s manufacturers with nationwide service centers network, trained and knowledgeable employees are able to service the customers handset related problems. Handset companies should allow service employees to draft a process with decision-making power to influence customer satisfaction and increased productivity. Handset manufacturing companies must operate a call center for managing availability of spares parts, pricing adopted by company service center’s or franchisees to avoid overcharging than the company stipulated charges, repairs with speed to avoid escalated customer complaints with quality service. For example service centers are charging a $ 2 for retrieving the password from phone. Some companies are following a model of selling the printer at cheaper and cartridge at high cost, overcharging the customer for spares, battery, PCB, service charges. Handset manufacturers must provide a information booklet to customer’s highlighting the application usage, battery information, effect of electronic equipments, moisture, handset handling etc. Dell undisputed leader in US market with Speed, Quality, Flexibility, Innovation providing a customer with the high level of Engineering and Service support, which was not easily duplicated by competition’s was a major asset to Dell’s long term success.
3) Product development cycle and Quality management:
Visible handset changes, predictive market response and working on customer’s feedback in handset design becoming emerging challenge to handset manufactures. Portable device manufacturing companies with engineering excellence must design product development cycle, which is typically 12-18 months ahead of their formal product launch in the market to make it a success by avoiding any technical defect in product. A mounting pressures from competitors force the companies to launch the product as early as possible without much Quality testing. 9
Dell, Apple and Toshiba’s decision to recall Sony made batteries due to technical problem that causes a battery to explode, catch fire or drain faster also Canon’s decision to replace power cord as it may generate smoke or fire under certain conditions is a right decision I long run. The companies should accept a product defect and recall the product as it may endanger the safety of customer, customer’s asset and cause extensive brand damage through negative publicity. Sony made products is famous worldwide for their product Innovation and Trust. As someone has said correctly that “no company in the world can achieve a long lasting success without the trust of its customer’s, employees, investor’s and society. Handset manufacturers must provide a warranty of2 year n handset and battery. Low price is not always a factor in the customers mind, product value is more important. Handset theft protection is very important as the increase in mobile theft is causing a biggest problem to mobile user. Apple’s iPod portable digital device signifies the customer demand for high performance, reliable and quality product with video player accepting it as a lifestyle entertainment media.
Battery is a key component in handset. Mobile workforce is totally dependent upon voice, SMS, MMS, and email communication. But as the battery is not so powerful and they have to keep a spare battery for mobile usages. A handheld charger is required which can convert the mechanical energy into electric signals. Handset manufacturers selling the handset to underdeveloped countries provided the handset is failed in developed country, leading to the time lag of 12-18 months. This is one of the major reasons as the handset manufacturers procure the batteries from the OEM and from manufacturing to distribution the life of battery gets degraded. Handset manufacturers should make awareness about the battery overcharging, as it was a sheer wastage of electricity. Switching regulator, power MOSFET, power IC helps reduce overheating of battery, components and minimize current consumption. Li ion batteries charging process can be managed by battery management algorithm, single chip charging solution for cost sensitive high consumer applications.
5) Merger’s and Collaborative research:
Merger’s with other key player in market like HP and Compaq is useful for company to improve efficiency by sharing the wide portfolio of products, manufacturing facilities, distribution network, collaborative research and development, patents, employees and customer base through bundling of services by cost cutting. Electronic manufacturing industry is characterized by extreme product or technology protection through intellectual property right’s and patents. Worldwide companies interests in profit for growth and shareholder dividend were major barriers, to exploitation of patent based technology for the well being of society.
Cooperative research is necessary as average electronic equipment manufacturing company spend 15% of their revenue on research and development. Cooperative research like Cell the next generation microprocessor collectively developed in 2005 by Sony group, IBM Corporation and Toshiba Corporation. Cell has a clock speed of 4 GHz, useful for next generation portable devices.
6) Reuse OR Recycling of Mobile waste:
The best way to reduce the recycling is ruse the handset, which is in good condition by donating it to charities and can be used in poor countries, provided that the handset supports the operating frequency in that country. Scientific recycling of handheld devices like mobile is necessary as metal, plastic, chemicals used in handset and batteries are potentially hazardous and has long lasting effect on polluting soil, water reserves. Handset memory even if after deletion can be retrieved with help of software and may be potentially harmful for individual’s privacy. 125 million of handsets are discarded each year resulting in more than 65000 tons of waste material. Handset manufacturer must take back the handset, battery and charger from customers for collective 100% recycling to avoid a solid waste in environment.