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of our pockets much like our wallet that we never want to leave at home while we head for our work! Thanks to the telecomrevolution and its relentless evolution that together have made it possible even in developing countries like Bangladesh. This is the dominant device that we now express ourselves through, get our work done and share our pains and pleasures with.
In this paper we have analyzed this mobile telecom industry on the basis of its customer, competitors, industry perspectives, environmental analysis, marketing perspectives and finally have made some recommendations that we believe would contribute to the further growth and expansion of the industry. Each of the sections mentioned assumes an in-depth analysis. For example, in customer analysis, segments, buying motives and unmet needs have been addressed. Similarly, in competitor analysis, we have identified the major competitors both direct and indirect ones that are affecting the industry, and figured out the substitute products which can possibly invade its market share. Moreover, the strength and weaknesses of the major competitors have been identified, while we have delved into the strategic perspectives that they pursue. In industry perspectives, we have distinguished the very characteristics of the industry, including products and markets, and identified the industry size and growth (both actual and potential) on the basis of historical information and future projections. Then Porter's five forces theory has been applied to the industry structure to better understand the barriers to entry, potential entrants, threat from the substitute products, bargaining power of the suppliers as well as of customers; also current success factors have been explored here. Then we have conducted PEST analysis to understand the current and potential trend of the industry that enabled us to project the future scenarios. Marketing perspectives have been defined in light of product, price, promotion and place that the industry practices.
Very much like the nature of the technology, the telecom industry in our country is also changing very rapidly. This is now in its saturation and he subscriber base as a result is increasing at a decreasing rate. The paper presents ways on how the industry can stay here for longer period through expansion and growth before it turns to declining, of course, in light of the realities that it's now confronted with.
The introduction of telecommunication industry has been pretty late in our country compared to that of the neighboring countries. This is very much attributable to the political unrest in early 1990s. Though the first telecom company, Citycell, was introduced ages ago, the device has not become so pervasive until 1997, the year when the biggest telecom of the country, GrameenPhone (GP) hit the market with its GSM technology. Since then there was no looking back. The industry grew at such an incredible rate in just a decade that anyone could hardly imagine. Now there are a number of players battling so hard for their respective market share and the consumers as well as the economy benefitted tremendously from this fierce competition. The following sections elaborate on almost every aspect of the industry, ranging from how it become so big, what fueled the growth to what are the risks and opportunities that it currently renders for the players.
A. Customer Analysis
Customer segmentation is a vital part of marketing success. Segmenting both existing and potential customers into target markets is an integral part of strategic planning. Proper segmentation in line with a firm's competency and core product can lead to profitable growth while failure to do so can effectively run a firm out of business. A firm's target markets may contain several sub-segments as well, and a firm may customize their products through augmenting values and features to meet each segment's needs while keeping the core purpose of the product intact. Segmentation also helps identify the key features of a product that will give the customers the most value for money and lead to building motive for buying. Identifying the needs of a customer often opens up new markets that a firm may expand into.
The customers of the telecom industry in Bangladesh pretty much include everyone in the country. Communication can almost be deemed a necessity nowadays and the telecom industry takes advantage of this by constantly promoting their products with high budget advertisements and endorsements, falling prices, and diverse products. Target customers are hardly ever able to avoid being exposed to telecom products, and combined with constantly reducing call rates resulting from competition, a large segment of the country's population now utilize subscription to more than one operator.
The telecom industry of Bangladesh tends to target the country's entire population as a single segment, but varies its product in terms of augmented features and benefits to appeal to distinctive segments of customers within that one segment. While all the players in the industry attempts to compete with each other in all segments, they usually tend to target heavily the segment in which their primary core competency lies.
Some of the customer segments are as follows:
The everyday user – Usually more interested in cheaper rates and good connectivity, this segment comprises of a large portion of customers (other than businesses) as it more or less includes any one and every one. This segment of users are often responsible for causing operators to go into price wars, as lower prices mean more customers. This segment often shows little loyalty to operators as they frequently change connections to find cheaper rates.
The corporate or business user – Target customers of this segment are of course all small, medium and large business houses in the country. This segment understandably contributes the significant portion of subscribers in terms of network usage and value for the industry. Most operators go into partnership programs with companies in order to provide all necessary products and services usually at reduced or corporate prices and with augmented benefits in order to foster profitable, long term relationships. Demands of this segment usually include Internet Connectivity (EDGE, GPRS etc.), Short Messaging Service (SMS), Email and other web application services (Blackberry Server) and efficient service.
The student user – Comprised of individuals that are studying in schools, colleges and universities, this segment is a hot prospect for operators as need for these users to stay connected to their friends is top priority. This segment can be considered to be a sub-segment of the everyday user, but their demands often include other advanced features such as Short Messaging Service (SMS), Internet connectivity (EDGE, GPRS etc.) and bonus talk times. Operators such as GrameenPhone introduced an additional product variant in the form of "dJuice" just for this segment.
The "couples" segment – Recognizing the need for "couples" to talk frequently with each other, some operators have come up with offers that target married or
unmarried couples or any two individuals that need to keep constant contact with each other. Each package contains two connections, so that each half of the duo may contact the other at highly reduced rates.
The rural user – Recognized early on by GrameenPhone, the demands of this segment is almost solely of the purest form: connectivity. Living in rural, dispersed, heavily underdeveloped areas, the individuals of this segment have a hard time keeping contact with their friends and relatives. The primary type of product that target these customers revolve around offering good connectivity in hard to reach localities and low call rates to increase affordability.
The Internet user – While Internet Connectivity is now incorporated (or optionally incorporable) in almost all products of the industry, there are some users who are turning to telecom operators solely for Internet connectivity through the use of mobile (or modem) devices. The primary attraction that operators provide to this segment is the portability of such devices. In an era of information on the go, the need for wireless connectivity to the Internet is in high demand, and portable wireless connectivity devices such as Citycell's ZOOM and GrameenPhone's & Banglalink's EDGE modem have taken advantage of the situation.
II. Buying Motive
The customer's motive for buying telecom products has always been to communicate. In todays fast pace world of globalization and with friends and family living and working in distant locations, face-to-face and letter based communication just does not suffice. People are always moving around, so land based telephones are also inconvenient. The only way for people to communicate is seemingly through mobile phones or through the Internet. The telecom industry provides services to combine both mobile phones and Internet and at low, affordable costs. Combined with additional services such SMS and advanced services of web applications such as Blackberry, the telecom industry offers a wide range of products and services that provides ample motive to the customer.
III. Unmet Need
In our neighboring country, India, 3G mobile service had been introduced in 2008. Bangladeshi people also seeking for it as it allows simultaneous use of speech and data services and higher data rates. In our country, data transfer rate is really slow. People often face buffering problems while using Internet, and so people want higher data transfer rate. People also want 3G because of its higher security features as it allows the UE (User Equipment) to authenticate the network it is attaching to, the user can be sure the network is the intended one and not an impersonator. As people are continuously being exposed to news of technological updates of other countries, the demand is being created for:
Mobile TV – a provider redirects a TV channel directly to the subscriber's phone where it can be watched.
Video on demand – a provider sends a movie to the subscriber's phone.
Video conferencing – subscribers can see as well as talk to each other.
Tele-medicine – a medical provider monitors or provides advice to the potentially isolated subscriber.
Location-based services – a provider sends localized weather or traffic conditions to the phone, or the phone allows the subscriber to find nearby businesses or friends.
B. Competitor Analysis
I. Competitor Identification
The telecom industry is one of the few technical industries that have intense internal competition. With majority of the telecom companies of the country being multinational subsidiaries, who have vast finances at their disposal, and the Bangladesh market providing a population of roughly (and unofficially) around 200 million many of whom are intent of carrying more than one subscription, competitive price wars are ever present. During the early years, Pacific Bangladesh
Telecom Limited (Citycell) dominated the industry due to the absence of competition (Sheba Telecom struggled horribly to gain market share because of poor infrastructure). However, during that period, customers were deprived of benefits as Citycell ran a monopoly market focusing more on profit than on expansion. But with the introduction of GrameenPhone and Aktel, The scenario changed significantly as call rates started to falter, with GrameenPhone racking up market share through its improved area coverage and customer driven products. The later injection of Egyptian company Orascom into Sheba Telecom, which renamed its brand to Banglalink, triggered a price war that created a massive drop on both registration and call rates. In December 2004 Government owned Teletalk BD Ltd. started its journey with the slogan "Desher Taka Deshey Rakhun" ("Keep your Money in your Country"). Teletalk is the first operator in the country that gave BTTB (now BTCL) incoming facility to its subscribers. Warid Telecom International LLC, an Abu Dhabi based consortium, was the sixth mobile phone carrier to enter the Bangladesh market, and launched commercial operations in May 2007. It has since sold a majority 70% stake in the company to India's Bharti Airtel Limited.
Mobile phone operators covered Bangladesh include: Banglalink/Sheba (Orascom Telecom Holding S.A.E), GrameenPhone (Telenor & Grameen Telecom Corporation,), Robi/Aktel (Axiata Group Berhad & NTT DoCoMo INC), Citycell (Singtel, Pacific Group and Far East Telecom), Warid (Bharti Airtel & Warid Telecom International), and Teletalk (BTCL).
Main indirect competitors are PSTN operators. The PSTN operators in Bangladesh are:
BTCL Former BTTB
Peoples Telecommunication and Information Services Ltd.
Ranks Telecom Ltd.
Tele Barta Ltd. - branded under the name Jubok phone.
Jalalabad Telecom Ltd. - branded under the name Bijoy Phone.
Onetel Communication Ltd.
National Telecom Ltd.
Dhaka Telephone Co. Ltd.
Integrated Services Limited (ISL) - branded under the name Sheba Phone
S.A Telecom System Ltd.
As mobile operators also provide internet service, ISPs & Wimax service providers like Qubee & Banglalion also fall in this category.
For voice transfer, main substitute product is BTCL's land phone. Besides BTCL's land phone there are also some PSTN phone operators in Bangladesh. Though 5 of
the PSTN operators operation have been suspended by Govt. but in future more companies will get license to operate PSTN phones.
For data transfer, in Bangladesh there are more than 50 listed internet service providers. Last year two Wimax service providers have started their operation. Illegal internet & VOIP phones are also serving as substitutes for mobile phones.
II. Major Competitors
The major competitors of the mobile telecom industry include wireless Internet providers (Banglalion, Augere), PSTN and VoIP based operators. Although the Government has so far banned majority of VoIP operators, there are still some operating illegally in the country. Wireless Internet providers are also a threat as increased usage of smart phones and PDAs mean that communication can be made over the Internet using hand held devices rather than having to go over mobile phone networks. Taking these contenders as a joint threat, their strengths, weaknesses and strategies are discussed below.
Strengths and Weakness
The major strength of wireless Internet providers and VoIP operators is high data transfer rates. Whether it is Internet data or voice data, these service providers have relatively higher bandwidth compared to mobile network operators. Additionally, this extra bandwidth may come at cheaper costs. The technology for such providers is also relatively new to the customers and thus can create a sense of intrigue among the customers resulting in a motive to buy.
The weakness of such service providers lies in infrastructure. Setting up new facilities and support structure is difficult, time consuming and expensive. Costs can boil down to customers and substantially raise prices. This is observed currently in the case of Augere promoted Qubee, where the costs are creating a barrier for customers. Also, advanced hand held devices and laptops (which are often necessary to access these services) is currently beyond the affordability of majority of the population. VoIP on the other hand faces great barriers from the Government (BTTB) regarding licenses as the Government currently has imposed a ban on the service and all providers.
Due to the lack of technological development and support from the Government, these competitors are currently restricted to a small segment of customers. Wireless Internet providers are currently targeting niche markets, trying to create a sense of status for selling their products. They have also attempted in providing business solutions for some institutions and have managed to create Internet hotspots at certain locations in Dhaka and Chittagong in an attempt to give the general public a taste of their service. VoIP providers are desperately trying to get the Government to issue licenses, some resorting to illegal activities. There is some hope for these providers in the form of many institutional bodies pushing in their favor. The current strategy for these contenders seems to be either to lie in wait for the political situation to improve or to try to build up finances through targeting the tech savvy – those of whom are willing to pay a premium for acquiring a rare commodity. One prospect in their favor at the moment is that emergence of such competitors could significantly drive down prices for Internet (Broadband, Dial-up) and mobile telecom services and therefore there is support from the customers for VoIP legalization and increased wireless connectivity.
C. Industry Perspectives
I. Distinguishing Characteristics of Industry
The employee market for the telecom industry is well supported by a large number of ICT graduates produced by various institutions around the country as well as a significant number of non-IT graduates. During 2002-2006, a large number of students jumped into ICT related study as the telecom and IT industry was growing rapidly with the introduction of Banglalink and Teletalk and drive towards expansion by then existing companies. Employee salaries vary immensely, some even as low as USD 70 per month. The skill level of the work force is satisfactory, and this low cost, relatively skilled labor force can be considered a significant competency of the Bangladesh telecom industry.
The telecom industry is well supported by foreign companies such as Swedish giants Ericsson and Finnish giants Nokia as a telecom related products suppliers. All
these companies have admirable experience and international competence. The companies have provided support and training for the improvement of telecommunication skills and for bringing in the latest technology to the country. Ericsson for example has given immense support to GrameenPhone for developing their services and infrastructure.
The government policy for foreign investment is quite liberal. All aspects of business are governed by the Telecommunication Act 2001, and most of the procedures are handled by Bangladesh Telecommunication Regulatory Commission. The BTRC is also in charge of issuing license to operators. Unfortunately, since the telecom industry runs on a spectrum which is a very scarce resource of any country, there is usually an oligopoly business environment available to its survivors. As a result licenses are not readily available and therefore BRTC issues licenses according to the feasible market needs. The government is liberal towards business activities of the telecom industry but does interrupt at the occurrence of anti-competitive behavior. No control is active over pricing strategy but the Government has placed tariffs and a range within which prices must be bound. Early entrants enjoyed the benefit of not having any licensing fee and the presence of high call rates. However, in recent years, controls imposed and intense competition has resulted in inconsistent profitability patterns.
II. Industry Size and Growth
Citycell (Pacific Bangladesh Telecom Limited) is the first mobile communications company of Bangladesh. It is the only CDMA network operator in the country. On March 26, 1997, GrameenPhone launched its service on the Independence Day of Bangladesh. They were the first to introduce GSM technology in country. Sheba Telecom (Pvt.) Ltd. obtained GSM license in 1996 to extend its business to cellular mobile, radio telephone services. It launched operation in the last quarter of 1997 as a Bangladesh-Malaysia joint venture. In September, 2004, Orascom Telecom Holdings purchased 100% of the shares of Sheba Telecom (Pvt.) Limited ("Sheba") & renamed it as Banglalink. Robi (formerly known as Aktel) launched its operations on the 15 November, 1997 in Dhaka and on 26 March, 1998 in Chittagong. Robi was formed as a joint-venture between Telekom Malaysia (now known as Axiata) and A.K. Khan Company. NTT DoCoMo, the Japanese Telecom Giant purchased A. K. Khan's share on September 19, 2008. The Only totally Bangladeshi owned operator
TeleTalk started operating on 29 December, 2004. Warid was the sixth mobile phone operator to enter the Bangladesh market, and launched commercial operations on May 10, 2007.
Consumer demand in Bangladesh makes the mobile and telecom market one of the fastest growing markets in the world. During the first six months of 2007, Bangladesh recorded 7.7 million subscribers, and by the end of that year around 35 million subscribers (a market penetration of 25%) was recorded, signifying year-onyear growth of 70%. Business Monitor International (BMI) has predicted that by the end of 2011, mobile subscribers will reach figures of around 115 million.
III. Industry Structure
Every company should have an assessment of the market environment to estimate how the company could react in different circumstances. Porter's five forces model has the ability to determine the competitiveness of a market. According to Porter, the collective strength of five major forces determines the ultimate profit potential of the industry. Strategy should be formulated in such a way that the company can defend itself against these forces or influence them in its favor.
The telecom industry of Bangladesh in respect to Porter's five forces is discussed below:
Barriers to Entry
While entering in a market, it is important to assess the barriers that could create hindrances during entry. Low entry barriers create competition and vice versa, high competition creates low entry barriers. Company's economy of scale (the capability of entering with large scale investment) can ease some entry barriers. Existing companies that have created significant brand positioning or have tied up relationships with suppliers and distributors can create barriers to newcomers. Government rules and regulations can also create difficulties to entrants. In the
Bangladesh telecom industry, high competition has created opportunities for new entrants. Together with high demand from subscribers, Bangladesh is seemingly a great prospect for new entrants. However, as mentioned before, since licenses must be acquired from BTRC, and BTRC reserves the right to issue licenses when and to whom they see fit, entry is relatively restricted at the moment on the government regulatory fronts.
Potential direct entrants (entrants focusing on directly coming into the country) to the telecom industry in Bangladesh is relatively restricted at the moment, due to control over licenses. However, recently companies are finding other ways to penetrate the industry, that is, through merging with existing market members. Recently Airtel merged with Warid Telecom through acquisition of majority share in order to enter the Bangladesh market. Other potential entrants who may be interested to come to Bangladesh include Reliance Telecom and Tata Indicom.
Threat from Substitute Products
Availability of greater substitutes creates additional competition forcing industry members to drop prices. In case of Bangladesh mobile telecom industry, substitutes exist in the form of government land lines and some upcoming PSTN operators. Some additional substitutes include wireless Internet providers such as WiMax based companies, Bangla Lion and Augere, which has been desperately marketing its brand Qubee since its entry to the market. However, it is safe to say that no direct, competitive substitutes exist at the present moment that can pose a threat to the industry.
Bargaining Power of Suppliers
The bargaining power of suppliers in the industry is strong in some cases if not in all. If the telecom operators had to design the products on the whims of the suppliers because their output is unique, then the suppliers would enjoy absolute advantage in terms of bargaining power. But here this is not the case. Again, since the number of the suppliers is very limited say NOKIA & Ericsson and a handful number of network administrators, they (the suppliers) have this power to leverage
on this, because this is limiting the choice of the operators and making the switching cost very high for them.
Bargaining Power of Customers
In our country the customers have absolute bargaining power. Because there are a number of operators in the market, the cost for switching loyalty is very low. Customers may want to switch from one operator to another for a better deal. Nothing can restrict this trend. In fact what we see is that every customer nowadays uses more than one mobile phone or at least owns more than one connection, and use them interchangeably. This trend is especially very dominant among the teenagers who constitute a major portion of the market share, and on the other hand are also very sensitive to price. This phenomenon of subscribing to more than one operator, needless to say, has sparked a boom for another kind of mobile hand set that enables customers to use dual SIMS in one handset. And mobile phone companies, such as Samsung and Spice, by understanding this need of the consumer have come up with phones with this feature. This shows how powerful consumers are in this industry as trend-setters and this applies to every aspect of the business ranging from the designing of the products to pricing them.
IV. Life Cycle Position
The BCG matrix gives an understanding of a company's current position in terms of business growth rate and market share. We will attempt to place the current industry contenders in the BCG matrix and get an ideal of the overall position of the industry. BCG matrix has 4 quadrants:
Where market share & market growth potential both are low, that's termed as dog. The best policy here is to liquidate the business.
Star is quite opposite to the dog. Where market growth & market share both are high, that's called star. Here further big investment is needed to keep the market share protected from competitors. When growth will be slowed down, it will be cash cow for the organization.
Where market share is high but growth rate is low, that's called cash cow. No further big investment is needed; the best thing to do is skim revenue as much as possible.
Question mark is where market growth rate is high but company's market share is low. Here big investment is needed to grip market share. Big investment will transform it to star. Anything invested under adequate level will be a lost investment. Low or no investment will transform it to dog.
As BCG matrix was explained above, now we are relating mobile phone industry to the matrix. As market growth potential for mobile phone industry has become low because of possible market saturation, so firm's of the industry are in either cash cow or dog quadrants. We can easily say companies like GP, Banglalink, Citycell are in cash cow quadrant. They have done their initial investment, infrastructure development is completed, and now their target is revenue generation. Robi is somewhere between cash cow & dog. But Warid & Teletalk are in dog quadrants. Warid has already sold their maximum ownership to Airtel. Teletalk is staying in the market backed by a huge amount of Government subsidy.
V. Key Success Factors
There are many key factors that have resulted in the boom of the telecom industry. While many may have considered today's scenario impossible 15 years back, the success of the telecom industry shows the thirst Bangladesh has for technology.
Current Success Factors
The current success of the telecom industry is primarily due to an intense demand from customers for their services and products. The large population of Bangladesh provides an almost never ending market of opportunity. The market had been untapped for a long time because of political instability, therefore when the customers were presented with the opportunity to own and talk over cell phones, which had long been considered a symbol of status, customers bought in hordes. Ever present promotions and advertisements, most of which were highly innovative and attractive were also a key factor in the industry's success. The ability to provide communication solutions to large businesses was also a big advantage for some
companies of the industry. GrameenPhone and Citycell are big in this context and focus heavily on Customer Relationship Management to provide dedicated customer services to business organizations.
Five Years Out
Five years out, the market may very well be heading towards complete saturation. To fight against this, the industry will encounter mergers from foreign and local companies in a bid to raise finances for research and development. Feature augmentation will be a key driving force and R&D is set to play a key role in it if the Government policies support such endeavors. There is a big chance of smaller operators such as TeleTalk of going out of business, as there is so much subsidy that the Government can provide. As a result, the market may de-saturate momentarily allowing access for new entrants. Companies will tend to focus more on B2B services than B2C as the business market is expected to expand as Bangladesh becomes more industrious.
D. Environmental Analysis
I. Trends and Potential Events (PEST Analysis)
A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:
The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macro-environmental factors.
Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. These include tax policy, employment laws, environmental regulations, trade restrictions and tariffs, and political stability. Political environment in Bangladesh is always unstable. Frequent changes of government and policymakers' reluctance or incapability to implement or design progress oriented policies is a major drawback for the telecom industry, an industry that is constantly changing in terms of technology.
Economic factors affect the purchasing power of potential customers and the firm's cost of capital. These include economic growth, interest rates, exchange rates, and inflation rate. In context of customers' buying power, in many ways Bangladesh is a poor country. With a low GDP per capita and a majority of the population under poverty level, to much of the population, a mobile phone and a network subscription is a luxury. However, the emergence and rapid spread of pay phone stalls utilizing mobile phones, has eased usage somewhat for these customers.
Social factors include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. Social factors include health consciousness, population growth rate, age distribution, career attitudes, and emphasis on safety. The telecom industry has definitely made an impact on the job market of the country, taking in thousands of employees and creating new career opportunities everyday. The overuse of mobile phones has often triggered arguments regarding safety, but the Bangladesh market does not regard it as a threat.
Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Technological factors include R&D activity, automation, technology incentives, and rate of technological change. Sadly Bangladesh does not have an infrastructure that allows for research and development of large scale. However, recent drives to automate day to day activities have been taken by a majority of telecom companies, most notable by GrameenPhone with their new corporate headquarters that reportedly runs on its own power supply and is fully automated (including doors, lights etc.). While Bangladesh's policies and government processes hamper fast technological change, the telecom industry has in many ways influenced the both the public and private sector to invest and bring in new technology such as WiMax and submarine cable, although limitations have not allowed these technologies to flourish.
From the PEST analysis, we can see that the macro-economic environment in terms of Political, Economical and Technological factors can be complex and hard to break through. But the customers of the market do display an uncanny need for communication through cell phones and are often noted to spend more money on making calls than they do on food. In terms of Social factors, the market is still thriving for more. Customers are still willing to try something new and because of lack of loyalty, customers are always ready for a new operator, hoping that call rates will fall even more.
II. Future Scenarios
Mobile Apps: The mobile telecom world in recent times has observed a massive change in the telecom industry. It's much different now in the way the industry operates from what it was 10 years ago. The focus of the industry in recent years has unanimously shifted from building subscriber base to building a successful mobile app store as competition among the players heats up. However, building a strong subscriber base initially mattered a lot for the operators in that nascent industry. As the industry becomes saturated, point of differences among the players gradually dissipates and the number of subscribers increases at a decreasing rate. Now it's all about the mobile applications. This is an emerging phenomenon that has turned out to be a $6 billion business following the Apple's launch of Apple App Store and has affected almost everyone involved in the business, ranging from app
developers, and mobile phone manufacturers to the operators. This offers a complete new stream of revenues not only to the carriers but also to the developers as well as phone makers, which is yet to be exploited to its fullest extent in our country.
Amendment of Telecom Act: Amendment of existing acts or enactment of new acts may offer both risk as well as opportunities for the operators--existing and potential, which may encourage or discourage them to go for further investment. For example, the recent amendment proposal for telecommunication act 2001 has sparked a debate between the mobile telephone operators and the government. While the government, justified the proposal for amendment citing the need to prevent illegal VOIP as well as to put a check on mobile crimes, the operators has termed it "unacceptable proposal" by indicating that several provisions of it are proposed completely against the interest of the stakeholders. One of such instances is the bill has left no room for an appeal by an operator against a regulatory decision, which they termed as against the very doctrine of democracy that the government claims to stand on. Clearly, such amendments if passed can not only put a barrier to entry, this at the same time may drive away the existing players from the business. Unfortunately, political instability and inconsistency in decision making have always been prevalent in our country in all successive regimes, which impedes the growth of almost all industries.
Contract Cell phones: This is nothing new to the world telecom arena. In western and European countries contract cell phone is a major form of doing business. For example, iPhone is a very high-end handsets and it may cost as much as $700 if bought from an apple store without any contract with mobile phone operator. But the same phone can be purchased for as low as $200 if purchased from an operator. This purchase is more of a contract with that particular operator that is binding the user to use the phone at least for a certain period of time, say, for two years. This trend can emerge in our country also as in major urban cities like Dhaka & Chittagong, there is a sizable population, especially young adults, who are very much attracted to the high-end mobile phone handsets. For them, getting a highend set for such a low price would be a very lucrative option. This trend also assumes a greater impact on b2b implications in the sense that it brings the mobile manufacturers, the operators and the end-users to the same platform and as a result the success or failure becomes inter-dependent on each other.
The Emergence 3G & 4G: This is much more upgraded version of the technology than what the industry currently uses. Since the market is already saturated and since the point of differences among the product offerings of the current operators
are rapidly dissipating, for any new entrant to invade the market share, it must incorporate 3G in its offerings to differentiate itself from the competition. And historically Bangladeshi people has always welcome any new initiatives or changes and developments in technological environment that can enable them do things much more efficiently at a much less cost.
E. Marketing Perspectives (4 Ps)
The marketing mix of the industry can be broken down into the "4 Ps" of marketing. These are the parameters that the marketing manager can control, subject o the internal and external constraints of the marketing environment in order to make decisions focusing on the customers in the target market in order to create perceived value and generate positive response.
As mobile telecom is mainly a service industry, the main service of the industry is voice transfer service which is the heart of the industry. The second important service provided by this industry is the data transfer service i.e. Internet. Internet is provided in the form of EDGE & GPRS by the operators. Text message (SMS and in some cases Media messages or MMS) is also an important service. To get the services, customers need to buy SIM card or RIM card.
The tangible products of the industry are mobile sets & Internet modems. Those are not produced by the mobile operators but various mobile set & modem manufacturers make it for them.
Recently various kinds of utilities bills can be paid by GP & Teletalk. After sales & customer service are also important services provided by mobile operators.
Initially, connection price was above the reach of average people of the country. Call rates and network charges were also high. But now scenario has changed significantly. A pre-paid connection can be purchased within 200 Taka, where a post-paid connection can be purchased within 1000 Taka.
Call rates vary from package to package. There are differences in call charges in various times of a day. But on an average it's now 1 Taka per minute for voice call. SMS charge less than 1 Taka per SMS for some operators. There are various rates for various packages of Internet service. It can be on volume basis (dependant on bytes downloaded or transferred) or at fixed rates. In most cases, the average rate per kilobyte is around Taka. 0.02.
In the case of promotion, mobile companies are very aggressive. They place their ads in every possible media - from TV to radio, from print media to Internet, from the body of the buses to billboards. Operators spend enormous amounts of money on advertisements, often acquiring the services of leading media producers and actors to direct and play out TV commercials. One of the operators is currently sponsoring Bangladesh cricket team, and operators regularly sponsor various events around the country in a bid to promote their brands.
Most of the operators have established their distribution facilities almost everywhere in Bangladesh. They have their own customer care centers almost in all the important areas of almost all the different regions of the country. Some operators have also assigned franchise distributors. Besides their own customer centers, there are one or more authorized dealers in every district. Mobile SIMs are available in many mobile accessories & stationary stores also. It can be said that they have made their SIMs very conveniently obtainable.
Flexibility in Government Regulations: While formulating and/or amending any act, the government should make the final decision in consultation with the industry experts as well as the industry operators so that the decision to be made benefits both the industry in particular and the economy at large. Government should play a role of facilitator to expedite the growth of the industry and also should follow the international standards in any legal procedures so that the potential foreign investors feel encouraged to inject investment into the economy and also the existing players feel motivated to expand their business.
Offering post-paid connections to young-adults: For years, operators in our country assumed that many teens and college students could not afford to subscribe to the post paid cellular services, so they pushed pre-paid cellular to this group. Given the current situation of the market, telephone companies should understand that this segment possesses three major characteristics that they starve for: 1) they have disposable income, 2) they have grown up with technology, and 3) they view their cellular as No. 1 possession. Still further, young adults (age 18 to 34) are two or three time more likely to also use services such as email, news and text alerts, all of which produce additional revenues for the companies. So this post-paid offering can give them more freedom to spend more. Just think of all the photographs that teens take with their cell phones and all of the ring tones that they pay to download.
Mobile Apps: Designing popular application is not an easy task. Here come the complicated issues like platform compatibility, user-friendliness, economics of the users, educating them and the like. Therefore, it's of paramount importance to consistently monitor what customer want and what they get through the feedbacks, then identify the gap in between through research and bridge the gap through continuous innovation. Operators must keep in mind that the search and the switching cost have substantially reduced due to the easily accessible and available information and the users have become more skeptic and intractable as a result. That's why designing is so crucial and critical. In this connection, developing a consortium of apps developer, phone maker and the operators seems to be a viable option. It will help know them better and serve them the best. To lead the consortium or in other words, in order to attract the developers, operators can leverage its powerful brands and marketing expertise, quality storefronts and monetization process. In fact, operators' use of these advantages will determine their strategic directions for the future. But that's not enough to attract developers. A generous profit-sharing- agreement can help in this regard. The current market trend suggests that 70% of the revenues coming from the apps straight goes to the developers' pockets. But still the deal helps the operators acquire new customer, reduce the attrition rate and net higher average revenue per user. So it's still worth the deal!
Contract Cell Phones: There's tremendous first mover advantage that the company may aim at. The existing players should form alliance with the giant cell phone operators to exploit this opportunity.
Merger and 3G & 4G viability: Huge first mover advantage is also present here. All the existing players in the industry need to do is transfer the technology, expertise, know-how, and people through merger or acquisition and dedicate them to build a new infrastructure to thrive on the market.
Finally, all these emerging concerns and phenomena in the industry offer both merits and demerits to the operators at the same time. Let's take the app phenomenon to elaborate on. In the face of this new move towards mobile apps business, telecom operators throughout the world share a common fate of becoming mere conduits to the successful app stores of others in one hand, and due to the fierce competition among the operators, this phenomenon also provides numerous opportunities to stand out from the crowd, on the other, especially in emerging markets like ours. Regardless to say, the app industry is evolving very, very quickly. It may put so many existing powerful players out of their business and may give the business to the new entrants. In light of this reality, the operators have got two simple choices: as to whether to adapt to this revolutionary trend by incorporating mobile apps in every offering and reap the substantial advantage out of it or to bear the brunt of losing business. Similarly, excessive flexibility in regulations may sometimes put a greater interest of the nation at risk. So check and balance on the part of the government are the keys. The future surely holds a lot more shocks and surprises for us to witness!
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