Marketing Strategy of Aircel

7/26/2019 Marketing Strategy of Aircel

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CHAPTER 1

INTRODUCTION

TELECOMMUNICATION

The word telecommunication was adapted from the French word telecommunication. It

is a compound of the Greek prefi tele!" meanin# $far off$" and the %atin communicates"

meanin# $to share$. Telecommunication is the transmissionof si#nals o&er a distance for

the purpose of communication. In modern times" this process almost alwa's in&ol&es

the sendin# of electroma#netic wa&es(' electronic transmitters (ut in earlier 'ears it

ma' ha&e in&ol&ed the use of smoke si#nals" drums or semaphore. Toda'"

telecommunication is widespread and de&ices that assist the process" such as the

tele&ision" radioandtelephone"are common in man' parts of the world. There is also a

&ast arra' of networks that connect these de&ices" includin# computer networks"pu(lic

telephone networks" radio networksand tele&ision networks. Computer communication

across theInternet" such as e!mailand instant messa#in#" is )ust one of man' eamples

of telecommunication.

The (asic elements of a telecommunication s'stem are*

a transmitterthat takes informationand con&erts it to a si#nalfor transmission

a transmission mediumo&er which the si#nal is transmitted

a recei&erthat recei&es and con&erts the si#nal (ack into usa(le information

+ften telecommunication s'stems are two!wa' and de&ices act as (oth a transmitter

and recei&er or transcei&er. For eample" a mo(ile phoneis a transcei&er.

Telecommunication o&er a phone line is calledpoint!to!point communication(ecause it

is (etween one transmitter and one recei&er" telecommunication throu#h radio

(roadcasts is called(roadcast communication (ecause it is (etween one powerful

transmitter and numerous recei&ers.

A collection of transmitters" recei&ers or transcei&ers that communicate with each other

is known as a network. ,i#ital networks ma' consist of one or more routersthat route

data to the correct user. An analo#ue network ma' consist of one or more switchesthat

1
http://en.wikipedia.org/wiki/Transmissionhttp://en.wikipedia.org/wiki/Signal_(electrical_engineering)http://en.wikipedia.org/wiki/Communicationhttp://en.wikipedia.org/wiki/Electromagnetic_wavehttp://en.wikipedia.org/wiki/Smoke_signalhttp://en.wikipedia.org/wiki/Drum_(communication)http://en.wikipedia.org/wiki/Semaphorehttp://en.wikipedia.org/wiki/Televisionhttp://en.wikipedia.org/wiki/Radiohttp://en.wikipedia.org/wiki/Telephonehttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/Public_telephone_networkhttp://en.wikipedia.org/wiki/Public_telephone_networkhttp://en.wikipedia.org/wiki/Radio_networkhttp://en.wikipedia.org/wiki/Television_networkhttp://en.wikipedia.org/wiki/Internethttp://en.wikipedia.org/wiki/E-mailhttp://en.wikipedia.org/wiki/Instant_messaginghttp://en.wikipedia.org/wiki/Transmitterhttp://en.wikipedia.org/wiki/Informationhttp://en.wikipedia.org/wiki/Signal_(electrical_engineering)http://en.wikipedia.org/wiki/Transmission_mediumhttp://en.wikipedia.org/wiki/Receiverhttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Transceiverhttp://en.wikipedia.org/wiki/Point-to-point_communication_(telecommunications)http://en.wikipedia.org/wiki/Broadcastinghttp://en.wikipedia.org/wiki/Telecommunications_networkhttp://en.wikipedia.org/wiki/Routershttp://en.wikipedia.org/wiki/Telephone_switchhttp://en.wikipedia.org/wiki/Signal_(electrical_engineering)http://en.wikipedia.org/wiki/Communicationhttp://en.wikipedia.org/wiki/Electromagnetic_wavehttp://en.wikipedia.org/wiki/Smoke_signalhttp://en.wikipedia.org/wiki/Drum_(communication)http://en.wikipedia.org/wiki/Semaphorehttp://en.wikipedia.org/wiki/Televisionhttp://en.wikipedia.org/wiki/Radiohttp://en.wikipedia.org/wiki/Telephonehttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/Public_telephone_networkhttp://en.wikipedia.org/wiki/Public_telephone_networkhttp://en.wikipedia.org/wiki/Radio_networkhttp://en.wikipedia.org/wiki/Television_networkhttp://en.wikipedia.org/wiki/Internethttp://en.wikipedia.org/wiki/E-mailhttp://en.wikipedia.org/wiki/Instant_messaginghttp://en.wikipedia.org/wiki/Transmitterhttp://en.wikipedia.org/wiki/Informationhttp://en.wikipedia.org/wiki/Signal_(electrical_engineering)http://en.wikipedia.org/wiki/Transmission_mediumhttp://en.wikipedia.org/wiki/Receiverhttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Transceiverhttp://en.wikipedia.org/wiki/Point-to-point_communication_(telecommunications)http://en.wikipedia.org/wiki/Broadcastinghttp://en.wikipedia.org/wiki/Telecommunications_networkhttp://en.wikipedia.org/wiki/Routershttp://en.wikipedia.org/wiki/Telephone_switchhttp://en.wikipedia.org/wiki/Transmission


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esta(lish a connection (etween two or more users. For (oth t'pes of network" a repeater

ma' (e necessar' to amplif' or recreate the si#nal when it is (ein# transmitted o&er

lon# distances. This is to com(at attenuationthat can render the si#nal indistin#uisha(le

from noise.

The shapin# of a si#nal to con&e' information is known as modulation. -odulation is a

ke' concept in telecommunications and is freuentl' used to impose the information of

one si#nal on another. -odulation is used to represent a di#ital messa#e as an analo#ue

wa&eform. This is known as ke'in# and se&eral ke'in# techniues eist / these

include phase!shift ke'in#" freuenc'!shift ke'in#" amplitude!shift ke'in# and

minimum!shift ke'in#. 0luetooth"for eample" usesphase!shift ke'in#for echan#es

(etween de&ices.

HISTORY OF GSM

The Group pecial -o(ile 2G-3 was created in 1456 (' European Conference of

postal and Telecommunications Administrations 2CEPT3 with the o()ecti&e of

de&elopin# a standard for a mo(ile telephone s'stem that could (e used across Europe.

In 1454" G- responsi(ilit' was transferred to the European Telecommunications

tandards Institute 2ETI3.The phase I of the G- specifications were pu(lished in

1447. The first G- network was launched in 1441 (' Radiolin)a in Finland. 0' the

end of 1448" o&er a million su(scri(ers were usin# G- phone networks The #rowth of

cellular telephones'stems started in the earl' 1457s" particularl' in (ein# operated ('

97 carriers across :5 countries.

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http://en.wikipedia.org/wiki/Repeaterhttp://en.wikipedia.org/wiki/Attenuationhttp://en.wikipedia.org/wiki/Noisehttp://en.wikipedia.org/wiki/Modulationhttp://en.wikipedia.org/wiki/Keyinghttp://en.wikipedia.org/wiki/Phase-shift_keyinghttp://en.wikipedia.org/wiki/Frequency-shift_keyinghttp://en.wikipedia.org/wiki/Amplitude-shift_keyinghttp://en.wikipedia.org/wiki/Minimum-shift_keyinghttp://en.wikipedia.org/wiki/Bluetoothhttp://en.wikipedia.org/wiki/Phase-shift_keyinghttp://en.wikipedia.org/wiki/European_Telecommunications_Standards_Institutehttp://en.wikipedia.org/wiki/European_Telecommunications_Standards_Institutehttp://en.wikipedia.org/wiki/Radiolinjahttp://en.wikipedia.org/wiki/Finlandhttp://en.wikipedia.org/wiki/Cellular_telephonehttp://en.wikipedia.org/wiki/Repeaterhttp://en.wikipedia.org/wiki/Attenuationhttp://en.wikipedia.org/wiki/Noisehttp://en.wikipedia.org/wiki/Modulationhttp://en.wikipedia.org/wiki/Keyinghttp://en.wikipedia.org/wiki/Phase-shift_keyinghttp://en.wikipedia.org/wiki/Frequency-shift_keyinghttp://en.wikipedia.org/wiki/Amplitude-shift_keyinghttp://en.wikipedia.org/wiki/Minimum-shift_keyinghttp://en.wikipedia.org/wiki/Bluetoothhttp://en.wikipedia.org/wiki/Phase-shift_keyinghttp://en.wikipedia.org/wiki/European_Telecommunications_Standards_Institutehttp://en.wikipedia.org/wiki/European_Telecommunications_Standards_Institutehttp://en.wikipedia.org/wiki/Radiolinjahttp://en.wikipedia.org/wiki/Finlandhttp://en.wikipedia.org/wiki/Cellular_telephone


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The Glo(al 'stem for -o(ile communications 2G-* ori#inall' from Group pecial

-o(ile3 is the most popular standard for mo(ile phonesin the world. G- ser&ice is

used (' o&er 6 (illionpeople across more than 616 countries and territories. The

u(iuit' of the G- standard makes international roamin#&er' common (etween

mo(ile phone operators"ena(lin# su(scri(ers to use their phones in man' parts of the

world.

From the point of &iew of the consumers" the ke' ad&anta#e of G- s'stems has (een

hi#her di#ital &oice ualit' and low cost alternati&es to makin# calls such as the hort

-essa#e er&ice 2-3.

The ad&anta#e for network operators has (een the a(ilit' to deplo' euipment from

different &endors (ecause the open standard allows eas' inter!opera(ilit'. %ike other

cellular standards G- allows network operators to offer roamin#ser&ices which mean

su(scri(ers can use their phones all o&er the world.

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http://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/1000000000_(number)http://en.wikipedia.org/wiki/Roaminghttp://en.wikipedia.org/wiki/Mobile_phone_operatorhttp://en.wikipedia.org/wiki/Short_message_servicehttp://en.wikipedia.org/wiki/Short_message_servicehttp://en.wikipedia.org/wiki/Roaminghttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/1000000000_(number)http://en.wikipedia.org/wiki/Roaminghttp://en.wikipedia.org/wiki/Mobile_phone_operatorhttp://en.wikipedia.org/wiki/Short_message_servicehttp://en.wikipedia.org/wiki/Short_message_servicehttp://en.wikipedia.org/wiki/Roaming


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G- is a cellular network" which means that mo(ile phones connect to it (' searchin#

for cells in the immediate &icinit'. G- networks operate in four different freuenc'

ran#es.-ost G- networks operate in the 477 -H; or 1577 -H; (ands. ome

countries in the Americas 2includin# the the' are mainl' used indoors.


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The GPR Core ?etwork2the optional part which allows packet (ased Internet

connections3.

All of the elements in the s'stem com(ine to produce man' G- ser&ices such as

&oice calls and -.

Subscriber identity mdu!e "SIM#

+ne of the ke' features of G- is the u(scri(er Identit' -odule2I-3" commonl'

known as a I- card. The I- is a detacha(le smart card containin# the user$s

su(scription information and phone(ook. This allows the user to retain his or her

information after switchin# handsets. Alternati&el'" the user can also chan#e operators

while retainin# the handset simpl' (' chan#in# the I-. ome operators will (lock this

(' allowin# the phone to use onl' a sin#le I-" or onl' a I- issued (' them> this

practice is known as I- lockin#" and is ille#al in some countries.

In the


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CHANGES $ITH THE CHANGING TECHNOLOGY

Technolo#ical chan#es in telecommunications and computers ha&e radicall' chan#ed

the (usiness scenario. In turn" the new demands of (usiness ha&e spurred man'

telecom!(ased technolo#ical inno&ations. In order to eploit these inno&ations for

competin# in #lo(al markets" the (usiness communit' the world o&er has (een puttin#

pressure on #o&ernments to re&ise the polic'" re#ulation" and structure of the telecom

sector. e&eral

Countries across the world ha&e responded (' restructurin# the state!controlled telecom

ser&ice pro&ider" increasin# pri&ate participation" and dere#ulatin# ser&ice pro&ision.

The emer#ent or#ani;ations ha&e attempted to (e more responsi&e to the (usiness needs

and ha&e e&ol&ed mechanisms to remain competiti&e e&en under tremendous pressures.

+&er the past se&eral 'ears" de&elopin# countries ha&e also reco#ni;ed the important

role a responsi&e" (usiness!oriented" and technolo#icall' ad&anced telecom sector pla's

in the #rowth of the econom'. -an' de&elopin# countries now see the constraints of

estate monopol' in telecom as standin# in the wa' of a response to the twin challen#es

of spurrin# internal #rowth and competin# in an increasin#l' #lo(al econom'.

Past eperience of reform across man' countries su##ests that the fundamental issue

that must (e addressed in telecom reform is effecti&e separation of the (asic functions

of polic' makin#" operational mana#ement" and re#ulation 2IT< Report 14543. The

econd le&el of consideration is access to capital and human resources. The third le&el

of concern is the introduction of competition for efficienc'. Competitions perhaps more

important than ri#ht ownership" if e&er there was an'thin# like it" in (rin#in# a(out

efficienc'.

The Indian telecom sector was wholl' under #o&ernment ownership until 145:" and

was characteri;ed (' underin&estment" outdated euipment" and #rowth well (elow the

potential of the market. In the mid!1457s" telecom was included (' the #o&ernment as a

part of the so!called .Technolo#' -issions a set of dedicated" welfare!oriented" and

well focused pro#rammes then implemented at national le&el.

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T%e DOT &nd t%e 'recursr t Re(rm

In one of the earliest steps towards reforms and (oostin# indi#eni;ation efforts" the

#o&ernment set up the Centre for ,e&elopment of Telematics 2C!,+T3 in 145: with the

o()ecti&e of initiatin# and mana#in# research in the switchin# and transmission

se#ments. u(seuentl'" the #o&ernment separated the ,epartment of Post and

Tele#raph in 145= (' settin# up the ,epartment of Post and the ,epartment of

Telecommunications.

In 145@ two new pu(lic sector corporations. The -ahana#ar Telephone ?i#am %imited

2-T?%3 and the idesh anchar ?i#am

%imited 2?%3.were set up under the ,epartment of Telecommunications 2,+T3.

The -T?%" which was car&ed out of the ,+T" took o&er the operation" maintenance"and de&elopment of telecom ser&ices in 0om(a' and ?ew ,elhi. The ?% was set up

to plan" operate" de&elop" and accelerate international telecom ser&ices in India. The

#o&ernment created the corporate or#ani;ations in orderto allows decision makin#

autonom' and flei(ilit' and facilitates pu(lic (orrowin#s that would not ha&e (een

possi(le under a #o&ernment framework. Howe&er" polic' formulation" re#ulation" and

se&eral ke' decision areas remained with the ,+T.

A new or#ani;ation" the Telecom Commission" was created in 1454 with a wide ran#e

of eecuti&e" administrati&e" and financial powers to formulate and re#ulate polic' and

prepare the (ud#et for the ,+T. The Telecom Commission had four full!time mem(ersB

mana#in# technolo#'" production" ser&ices" and finance and four part!time mem(ers

representin# the Plannin# Commission" ,epartment of Finance" ,epartment of

Industr'" and ,epartment of Electronics. The creation of the -T?%" its su(seuent

operations" and the relationship of the personnel emplo'ed in the -T?% to their

counterparts in the ,+T raised uestions a(out the or#ani;ational structure most suited

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for this sector. Therefore" in 1441" upon #o&ernment initiati&e" the hi#h!powered

Athre'a Committee su(mitted a report on the appropriate or#ani;ational structures for

this sector.

The report recommended*

Placin# (oth polic' and re#ulator' mechanisms under the Telecom Commission.

0reakin# up of the ,+T into ;onal corporations under the #o&ernment.

ettin# up of a corporation" initiall' in the pu(lic sector" to handle the lon#!

distance network. Allowin# &alue!added ser&ices 2As3 to (e pro&ided (' the pri&ate sector.

Indicatin# #eneral li(erali;ation in production of euipment #i&in# autonom' to

R, and trainin# institutions. u(seuentl'" other studies for reforms had (een commissioned" (ut in the

a(sence of pu(lic de(ate" and emplo'ee and union concerns re#ardin# the

conseuences of implementation. The #o&ernment did not formall' adopt an' report... ince 1449" there were

se&eral statements in the media (' ke' decision makers and the

Communications -inister callin# for corporati;ation of the ,+T. Howe&er"

there was &er' little pu(lic information or de(ate re#ardin# the seuence ofdecisions leadin# to corporati;ation or the form of corporate structure.

ince 144=" there was increasin# pressure from international or#ani;ations such

as the DT+ to re&iew the monopol' status of the ?% and the ,+TBs

monopol' in international lon#!distance communication respecti&el'. Re&iew

the monopol' status of the ?% in 677: and the possi(ilit' of openin# of lon#

distance in 1444. The ?% continued to ha&e a monopol' o&er international telecom and

(roadcast transmission. It had planned to enter the lon#!distance market (ut the

,oT hampered its plans. In 1444" the #o&ernment created the ,epartment of

Telecom er&ices 2,T3" whoBs ecretar' was appointed from the Indian

Telecom er&ices 2IT3 cadre" and the ,+T from the erstwhile the ,+T" whoBs

ecretar' was appointed from the Indian Administrati&e er&ices 2IA3. This

was done ostensi(l' to separate the ser&ice pro&ision component 2,T3 from

that of polic' makin# 2,oT3. In realit' this was to accommodate the conflict

caused (' the #o&ernmentBs decision to appoint a ecretar' to the departmentfrom the IA" as ,+T emplo'ees wanted the ecretar' to (e from the IT.

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Dhen the ,T ecretar' retired" the #o&ernment appointed an IA officer in his

place" which a#ain led to a#itation and further (ifurcation of the ,T into the

,epartment of Telecom +perations 2,T+3 and ,T. The ,T was to (e headed

(' an IA officer responsi(le for the -T?%" ?%" Telecommunications

Corporation of India %imited 2TCI%3" Indian Telephone Industries %td. 2ITI3"

and Hindustan Teleprinters %imited 2HT%3 as well as for formulatin# the

strate#' for corporati;ation. The ,T+ was responsi(le for mana#in# the

telecom network. The #o&ernmentBs &iew has (een that a person from outside the IT cadre would

(e (etter a(le to o&ersee the corporati;ation of the ,+T since in the past senior mana#ement of the erstwhile ,+T" mostl'

from the IT" had resisted an' kind of chan#e Althou#h an outsider ecretar' was ostensi(l' to facilitate corporati;ation" it is

not clear how" without the reuisite mandate from the emplo'ees and especiall'

the senior mana#ers" heshe would (e a(le to lead such a ma)or task. This is not

to sa' that the IT cadre was (etter euipped to handle this task. Dhat were

missin# were an o&erall strate#' and an indication of the direction of chan#e to

inform the administrati&e chan#es. The #o&ernment seemed to &iew

corporati;ation as an administrati&e decision rather than a process.

The Athre'a Committee report as well as su(seuent reports on restructurin#

ma' (e &iewed as the initiation of a process of Eaminin# or#ani;ational options. The reports" howe&er" did not accord due

attention to the need for autonom' in financial and +perational decision makin#. -ana#ement incenti&es that would ha&e allowed

these or#ani;ations to increase profita(ilit' and raise capital from markets had

(een onl' &er' sketchil' outlined thus access to capital would ha&e (een a

pro(lem.

0esides the limitations" the su##ested chan#es were superficial since most

.restructured. +r#ani;ations showed too much of a Control and rule orientation and continued to work in much the same manner as

(efore. Ina(ilit' of top mana#ement and political eecuti&es to address the need to

make the ,+T more competiti&e could (e cited as a failure. Gi&en the lar#e

(ase of emplo'ees who had (een entrenched in a t'pical (ureaucratic mode of

functionin# pro&idin#

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Customer orientation and a commercial approach were" and continue to (e" the

most difficult tasks. The ,+T had no specific trainin# polic' in this re#ard.

Thou#h there were se&eral trainin# centers" these were not euipped to pro&ide

mana#ement trainin#. The restructurin# was far more concerned with form thancontent.

Areas like identif'in# the mechanisms for acuirin# new core

Capa(ilities" de&elopin# appropriate incenti&es" and nurturin# a climate in

which chan#e could take place were lackin#.

Te!ecmmunic&tins Re)u!&try Aut%rity ( Indi& "TRAI#

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The Te!ecmmunic&tins Re)u!&try Aut%rity ( Indi& or TRAI 2esta(lished in

14493 is the independent re#ulator esta(lished (' the Go&ernment of India to re#ulate

the telecommunications (usiness in India. ?otwithstandin# an'thin# contained in the

Indian Tele#raph Act" 155=" the functions of the Authorit' shall (e to!

2a3 -ake recommendations" on a reuest from the licensor" on the followin# matters"

namel'*

2i3 ?eed and timin# for introduction of new ser&ice pro&ider>

2ii3 Terms and conditions of license to a ser&ice pro&ider>

2iii3 Re&ocation of license for non!compliance of terms and conditions of license*

2i&3 -easures to facilitate competition and promote efficienc' in the operation of

telecommunication ser&ices so as to facilitate #rowth in such ser&ices.

2&3 Technolo#ical impro&ements in the ser&ices pro&ided (' the ser&ice pro&iders.

2&i3 T'pe of euipment to (e used (' the ser&ice pro&iders after inspection of

euipment used in the network.

2&ii3 -easures for the de&elopment of telecommunication technolo#' and an' other

matter relata(le to telecommunication industr' in #eneral>

2(3 ,ischar#e the followin# functions" namel'*!

2i3 ensure compliance of terms and conditions of license>

2ii3 notwithstandin# an'thin# contained in the terms and conditions of the license

#ranted (efore the commencement of the Telecom Re#ulator' Authorit'

2Amendment3 +rdinance"6777" fi the terms and conditions of inter!connecti&it'

(etween the ser&ice pro&iders>

2iii3 Ensure technical compati(ilit' and effecti&e inter!connection (etween different

ser&ice pro&iders.

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2i&3 re#ulate arran#ement amon#st ser&ice pro&iders of sharin# their re&enue

deri&ed from pro&idin# telecommunication ser&ices>

2&3 la' down the standards of ualit' of ser&ice to (e pro&ided (' the ser&ice

pro&iders and ensure the ualit' of ser&ice and conduct the periodical sur&e' of

such ser&ice pro&ided (' the ser&ice pro&iders so as to protect interest of the

consumers of telecommunication ser&ices>

2&i3 la' down and ensure the time period for pro&idin# local and lon# distance

circuits of telecommunication (etween different ser&ice pro&iders>

2&ii3 maintain re#ister of interconnect a#reements and of all such other matters as

ma' (e pro&ided in the re#ulations>

2&iii3 keep re#ister maintained under clause 2&iii3 open for inspection to an'

mem(er of pu(lic on pa'ment of such fee and compliance of such other

reuirement as ma' (e pro&ided in the re#ulations>

2i3 ensure effecti&e compliance of uni&ersal ser&ice o(li#ations*

2c3 %e&' fees and other char#es at such rates and in respect of such ser&ices as ma' (e

determined (' re#ulations.

2d3 Perform such other functions includin# such administrati&e and financial functions

as ma' (e entrusted to it (' the Central Go&ernment or as ma' (e necessar' to carr' out

the pro&isions of this act.

Pro&ided that the recommendations of the Authorit' specified in the clause 2a3 of this

su(!section shall not (e (indin# upon the Central Go&ernment* Pro&ided further that the

Central Go&ernment shall seek the recommendations of the Authorit' in respect of

matters specified in su(!clauses 2i3 and 2ii3 of clause 2a3 of this su(!section in respect of

new license to (e issued to a ser&ice pro&ider and the Authorit' shall forward its

recommendations within a period of sit' da's from the date on which that

Go&ernment sou#ht the recommendations* Pro&ided also that the Authorit' ma' reuest

the Central Go&ernment to furnish such information or documents as ma' (e necessar'

for the purpose of makin# recommendations under su(!clauses 2i3 and 2ii3 of clause 2a3

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of this su(!section and that Go&ernment shall suppl' such information within a period

of se&en da's from receipt of such reuest*

Pro&ided also that the Central Go&ernment ma' issue a license to a ser&ice pro&ider if

no recommendations are recei&ed from the Authorit' within the period of specified in

the second pro&ision or within such period as ma' (e mutuall' a#reed upon (etween

the Central Go&ernment and the Authorit'.

Pro&ided also that if the Central Go&ernment has considered that recommendation of

the Authorit' comes to a prima facie conclusion that such recommendation cannot (e

accepted or needs modifications" it shall" refer the recommendations (ack to the

Authorit' for its reconsideration.

Mi!estnes in Te!ecm Re(rms

145: -anufacturin# of su(scri(er terminal euipment opened to pri&ate sector.

145= Telecom was constituted into a separate department with a separate (oard.

145@ -T?% and ?% created as corporations.

1455 Go&ernment introduces in!dialin# scheme. PA0 ser&ices onl' within a

(uildin#" or in ad)oinin# (uildin#s.

1454 Telecom Commission formed.

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1441 Telecom euipment manufacturin# opened to pri&ate sector. -a)or

international pla'ers like Alcatel" ATT" Ericsson" Fu)itsu" and iemens entered euipment manufacturin# market.

1446 A sector opened for pri&ate competition.

1448 Pri&ate networks allowed in industrial areas. 144: %icenses for radio pa#in# 269 cities3 issued.

-a' 144: ?ew Telecom Polic' announced.

eptem(er 144: 0road #uidelines for pri&ate operator entr' into (asic ser&ices

announced. ?o&em(er 144: %icenses for cellular mo(iles for four metros issued.

,ecem(er 144: Tenders floated for (ids in cellular mo(ile ser&ices in 14

circles" ecludin# the four metros" on a duopol' (asis. anuar' 144= Tenders floated for second operator in (asic ser&ices on a circle

(asis. ul' 144= Cellular tender (id opened.

Au#ust 144= 0asic ser&ice tender (id opened> the (ids caused lot of

contro&ers'. A ma)orit' of (ids were considered low. ,ecem(er 144= %+Is issued to some operators for cellular mo(ile operations in

circles. anuar' 144@ Re(iddin# takes place for (asic ser&ices in thirteen circles. Poor

response. The Telecom Re#ulator' Authorit' of India 2TRAI3 formed (' ordinance.

+cto(er 144@ %+Is (ein# issued for (asic ser&ices. -arch 1449 The TRAI Act passed in Parliament.

une 1445 e&eral As a&aila(le throu#h pri&ate operators. The first pri&ate

(asic ser&ice (ecomes operational. -arch 1444 Announcement of ?ational Telecom Polic'.

anuar' 6777 Amendment to the TRAI Act.

Au#ust 6777 Announcement of ,omestic %on# ,istance Competition Polic'.

+cto(er 6777 Planned Corporati;ation of ,+T.

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*ASIC STRUCTURE OF INDIAN TELECOM

1=


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E+OLUTION OF THE INDIAN TELECOM MAR,ET

-. 'enetr&tin &nd )rt%

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The Indian cell phone market essentiall' started in 1446 with the sale of licenses"

which ena(led the pri&ate sector to participate in the industr' 2C+AI" 677@3. In 144:"

cellular ser&ice licenses were #ranted for the ma)or metropolitan areas. This then

epanded to 1= circles in the followin# 'ear. er&ices were rolled out in 144= with

olkata (ecomin# the first cit' to #et a cellular network in Au#ust 144=. Howe&er" in

,ecem(er 6777 = 'ears after launch of cellular licenses penetration was still uite

low. In fact" there were onl' a(out 8.6 million su(scri(ers" primaril' in the ma)or cities

and lar#e towns.

The ma)or dri&er for chan#e was the Telecom Re#ulator' Authorit' of India

2TRAI3.TRAI was instituted in 1449" and soon started (uildin# policies and re#ulations

to push prices downward and spur competition. 0' ,ecem(er 677:" there were a(out

48mn phones in the countr'" of which :5mn su(scri(ers were cellular 2TRAI" ,ec.

677=3. The num(er of cellular phone users increased to a(out 9@mn in ,ecem(er 677=

and a(out 54mn phones in -arch 677@ 2Financial Epress" Apr 677@3

This trend indicates a CAGR of o&er 87J. orma +llila" Chairman and CE+ of ?okia"

recentl' commented that KIndia is amon#st the top = telecom markets in the worldL

2%i#ht readin# 677@3 when he &isited the countr' to reiterate his firmBs commitment to

the market. Indeed" no other countr' in the world has added :!=mn mo(ile phones per

month. Ehi(it 1 shows the #rowth of the postpaid and prepaid market in India"

includin# prediction for 6717.

The Indian wireless market has (oth C,-A and G- network operators. C,-A

operators entered the picture and #rew rapidl' Reliance" which owns a(out 97J of

the C,-A market currentl' with M 67.:: mn su(scriptions" #rew at o&er 11:J 'ear!on

'ear in 6776!78 one of the most eplosi&e phone launches e&er 2 TRAI un 6778"

Financial Epress" Apr 677@3. The o&erall C,-A su(scri(er (ase" thou#h" is still a(out

19


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66.6J of the market with Tata Teleser&ices takin# up most of the remainin# C,-A

share.

The G- pla'ers account for the remainin# M95J ! with a market that is less

dominated (' one pla'er. 0harti" state!owned 0?%" and Hutch control the lar#est

parts of this market and ha&e (een addin# su(scri(ers at an impressi&e pace. As of

April 677@" 0harti was the lar#est pla'er (' far" with 87.89 mn su(scri(ers. 0?% had

a su(scri(er (ase of 67.::mn" followed closel' (' Hutch with 66J of the G- market

and an o&erall share of 1=.76J.

The Telecom Re#ulator' Authorit' of India o&erseas the e&olution of this market. ince

its esta(lishment in 1449" this a#enc' has made man' ke' )ud#ments includin#

statements on tariffs" ualit' of ser&ice" net #eneration networks" etc. TRAI also

releases uarterl' reports on the state of the telecom industr' with special emphasis

on tariffs" interopera(ilit' (etween networks" and usa#e 2TRAI3.

ince Indian re#ulation makes it difficult for network operators to also sell phones 2due

to re&enue share a#reements3" there is a completel' parallel market for users to (u'

phones. In the G- space" users #o to handset pro&iders to (u' phones and then to

network operators to #et network ser&ices. -ost #lo(al handset manufacturers are

present in India with ?okia leadin# the pack (' far. In 677=" more than 81mn

handsets were sold. +f this" ?okia captured a(out @7J share o&er 15mn phones in

one 'ear. -otorola" which has a smaller share" is seein# #rowth with the introduction of

more ad&anced phones includin# its Ra;r platform. amsun#" %G and on' Ericcson

all ha&e reasona(le market share as well with %G caterin# almost eclusi&el' to the

C,-A space throu#h a tie!up with Reliance.

THE INDIAN MAR,ET / *ASIC DEMAND TRENDS

,emand for cellular ser&ices is interestin# for a &ariet' of reasons. 0efore caterin# to

this market" ser&ice pro&iders must consider unmet needs" price sensiti&it'" di&ersit' in

consumer profiles" and the skew in ur(an!rural markets.

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1.


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:. Pre!paid rules

Indian consumers choose plans and tariff structures that minimi;e monthl' ependiture.

Further" the' also choose tariff plans that let them switch easil' especiall' since the'

shop on price. Thus pre!paid I- cards are the dominant method of re&enue

#eneration. Dith this scheme" consumers (u' a I- card to use in their phones with a

set amount of mone' on it 2sa' MO173.

In addition" since recei&in# calls in India is free" &er' often consumers will onl' recei&e

calls on their phones. And almost e&er' cellular compan' has also introduced free

incomin# plans for 1!6'ears lifetime free incomin# plans. Thus" re&enues per user

are low" with pre!paid users contri(utin# MO=.@ per month. Dhile the a&era#e post!paid

user spends much more contri(utin# MO14 per month this is a small se#ment of the

market in India. In 677@" for eample" o&er 4=J of new phone additions were pre!paid

plans. 2TRAI ,ec 677@3 2ee Ehi(it 1 for potential #rowth of pre!paid &s. post!paid in

India3.

=. Rural &s.


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Conseuentl'" operators are droppin# prices to ensure the' #et their hands on the

epandin# customer pie and the lar#e untapped market means that re&enues from the

&oice market will dri&e the #rowth for the net few 'ears.

@. ,emo#raphics

The epected #rowth in the Indian G,P" @!9 percent annuall' from 677= to 6779" is a

#ood indicator of the increased purchasin# power of the population 2Asian

,e&elopment 0ank 677=3. A #reater percenta#e of the Indian population has hi#her

le&els of disposa(le income with which to purchase products and ser&ices. Alon# with

lower connecti&it' costs and cheaper handsets" the mo(ile market in India is seein# a

hu#e influ of su(scri(ers who can now afford (asic co&era#e.India is also

eperiencin# chan#in# demo#raphics that ha&e contri(uted to the eplosion in the

mo(ile market. Approimatel' 97 percent of IndiaBs 1.1 (illion population is (etween

the a#es of 1= and :7 2


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#o&ernment has raised the maimum forei#n direct in&estment 2F,I3 limit from :4

percent to 9: percent in Telecom ector. The #o&ernment also enacted the Access

,eficit Char#e 2A,C3 polic'" which reuires that a share of call re&enue (e paid to the

#o&ernment to assist in fundin# network epansion into rural areas.

As of earl' 677=" se&eral re#ulations were imminent. First" the launch of an KAll IndiaL

license would #i&e operators the ri#ht to pro&ide all forms of ser&ice throu#hout India

with one license. This structure would initiate the net phase of market consolidation"

with the result likel' (ein# fi&e to si main pla'ers. The pla'ers would ha&e #reater

scale which would lead to hi#her cost efficienc' and" ultimatel'" more flei(ilit'" and

allow e&en fied line users to switch to mo(ile ser&ices seamlessl' possi(l'

increasin# competition in the market. Finall'" the #o&ernment needed to decide how to

increase spectrum capacit'> since 6G networks are nearin# full capacit' 2K6GL stands

for second #eneration cellular technolo#ies" which are circuit!(ased" &oice technolo#ies

deplo'ed in the 1447s. This standard is (ein# replaced around the world with K8GL

networks that are faster.

GRO$TH OF TELECOM NET$OR, "0112#

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Dith a stron# population of o&er 1.1 0illion" India has (ecome one of the most d'namic

and promisin# Telecom markets of the world. In recent times" the countr' has emer#ed

as one of the fastest #rowin# telecom markets in the world. It has third lar#est telecom

network and the second lar#est wireless network in the world.

NET$OR, E3'ANSION

The total num(er of telephones has reached :649.6= lakh as on -arch 81"

6774 as compared to877:.46 lakh as on -arch 81" 6775.

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Dhile 1646.88 lakh connections were added durin# the twel&e months of 6775!74"

a(out 175 lakh connections were added e&er' month durin# the current fiscal 'ear.

The tele densit'" as #i&en in the followin# #raph" has shown a sustained increase

durin# last few 'ears.

It increased from [email protected] in -arch 6775 to [email protected] in -arch 6774.

Tele densit' #raph

Ce!!u!&r Ser4ice 'r4iders

As on Apr 6779 India has 1@9 million mo(ile phone su(scri(ers. +ut of this 16=

million are G- users and :1 million C,-A users.

6:


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0?%" 0harti Airtel" Hutch" Idea" Aircel" pice and -T% are the main G- pro&iders

in India. Reliance Communications and Tata Indicom are the main C,-A pro&iders in

India.

*%&rti Airte!

Airtel is pro&idin# cellular ser&ices in ,elhi" -um(ai" olkata" Chennai" Andhra

Pradesh" Gu)arat" Har'ana" Himachal Pradesh" ammu and ashmir" arnataka" erala"

-adh'a Pradesh" -aharashtra" Goa" +rissa" Pun)a(" Ra)asthan" Tamil ?adu"


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*SNLdid not face the heat until now as the re&enues werenBt dippin#. That doesnBt

hold #ood an' more and it has to (uck up or re&amp (efore it turns into an Air India.

0?% doesnBt ha&e the same kind of ecuses of Air India as it operates in a lucrati&e

telecom market.

The other operator which has seen a drop in re&enues is MTNL. This is in spite of the

entire 8G spectrum and the le#!up (oth 0?% and -T?% #ot from the #o&ernment.

Gi&in# su(sidies and special treatment doesnBt work after all.

Re!i&ncesaw a decent #rowth of 68.1J and its re&enues are 668:1 crores. It is 8rd in

line. The (est #rowth in re&enues was (' IDEA Ce!!u!&rat =7.9J.

Airtel and Reliance are the 6 India (ased operators to feature in the top 67 telecom

operators (' su(scri(ers.

T5 -1 te!ecm ser4ice 5r4iders by re4enues9

6@
http://www.indianomics.com/2009/07/02/top-20-telecom-operators-in-the-world/http://www.indianomics.com/2009/07/02/top-20-telecom-operators-in-the-world/http://www.indianomics.com/2009/07/02/top-20-telecom-operators-in-the-world/http://www.indianomics.com/2009/07/02/top-20-telecom-operators-in-the-world/


27/51

R&n:

+perator Re&enues

677@!79

Re&enues

6779!75

Re&enues

6775!74

Growth J

- 0harti Airtel 19555 6@:8@ 8@4@6 84.5

0 0?% :718= 8=64@ 8=1@9 !7.:

; Reliance 1::@5 15@85 668:1 68.1

6 odafone 17=@= 1=:99 6666: :8.@

< I,EA Cellular ::18 @967 1716= =7.9

= Tata Comm 55=9 56@8 44@8 67.@

> TT% =195 =448 @984 16.:

2 -T?% :468 :964 ::59 !=.1

? Aircel 1=79 6=65 8:6= 8=.=

-1 TT-% 1:66 1987 1868 9.5

MAR,ET STRUCTURE OF TELECOM INDIA

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Te!ecm in DELHI

In our state de&elopmental challen#es are man' and almost e&er' sector needs a special

attention and packa#e to #row. ince unprecedented pro#ress in technolo#' has made

telecom sector one of the en#ines of #rowth" we want to see this sector pro#ress to

65


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re#ister increasin# momentum in the #rowth of econom' on all fronts. E&er' one

percent #rowth in tele!densit' is accompanied (' 8J #rowth in Gross ,omestic

Product and sometimes this #rowth has (een reported a(o&e =J in some sur&e's

conducted in de&elopin# nations. The tele!densit' ! the num(er of phones per 177 of

population ! in fact is the &er' important indicator adopted for measurin# the

performance of this sector and in ,elhi it has risen from a mere 6.75 in 6771!6776 to

9.9@ in 677=!7@. De ha&e to (ear in mind that de&elopment of the telecom

infrastructure holds out a considera(le promise for the de&elopment of ,elhi (ecause of

the economic (enefits it will (rin# to state. As far as telecommunication facilities in

,elhi state are concerned" there are o&er 1@777 T, (oothsPC+s" 8@@ telephone

echan#es and 4 tele#raph offices 2CT+s,T+s3 re#ulatin# the ser&ices. The num(er of

telephone connections has #one (e'ond 4 lakhs includin# phones of mo(ile se#ment.

Dhen this is compared with the phone le&el of 6771!76" it is interestin# to note that

there has (een an addition of almost 9 lakh connections (etween 6771!76 and 677=!7@.

The mo(ile phones ha&e contri(uted @9J to this #rowth. Dith mo(ile ser&ices

launched onl' in Au#ust 6778" ,elhi state has (een a late entrant into the telecom

sector. ?onetheless" the teledensit' of ,elhi at the end of une 677@ was reported at 11"

mar#inall' short of the national a&era#e of 18.9. we cannot i#nore the fact that telecom

penetration has (een une&en across the ur(an and rural se#ments. Dhile the ur(an tele!

densit' of ,elhi at 84.5@ compares fa&oura(l' with the national a&era#e of :6.@=" rural

tele!densit' at 7.5: is much (elow the national a&era#e of 1.5=. Howe&er it is

interestin# to note that the a&era#e re&enue per user 2ARP


30/51

main constraint to #rowth of telecom in the state stems from the suppl' side 2ser&ice

pro&iders3. These ha&e resulted in the limitation on the epansion of ser&ices into

unreached areas of the state. E&en there has (een no ualit' impro&ement of eistin#

ser&ices. The lack of proper coordination (etween the three mo(ile ser&ice pro&iders in

the state" 0?%" Airtel" and Aircel" is creatin# difficulties for su(scri(ers as far as

smooth connecti&it' is concerned. Calls (etween ser&ices" within ser&ices" and to

landline phones are difficult to #et throu#h. It is nota(le that Reliance" which has a

lar#e presence in the rest of countr'" has 'et to start its operations in the state despite

ha&in# a license to do so now for the past two 'ears. There is need to encoura#e

competiti&e pressures throu#h multi!operator scenario in . As per the eistin#

TRAI #uidelines operators are o(li#ed to pro&ide connecti&it' to other operators at

points of interconnect 2P+I3 on their respecti&e networks. AIRTE% has reported that

0?% which owns the lar#est network in has not (een a(le to compl' with this

o(li#ation. There is ur#ent need that authorities who matter in telecom department take

co#ni;ance of this and sort out the impasse. %et them (ear in mind that

interconnecti&it' is &ital for health' competition amon# ser&ice pro&iders as it will

impro&e the ualit' of ser&ice and cut down the cost. Hi#h capital and operatin# costs

of telecom ser&ices in the state are put as ma)or hindrances in the smooth de&elopment

of the sector. The ser&ice pro&iders also point out mountainous terrain that hinders the

telecom si#nal there(' limitin# the reach of each telecom tower.

CHAPTER 6

C+-PA?N PR+FI%E

AIRCEL

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-aisB epansion into Indonesia and India is another milestone in our aspiration to (e

the re#ional communications leader of choice. The acuisition of a =1J stake in PT

?atrindo Telepon eluler 2?T3" Indonesia and a 9:J euit' interest in Aircel" India

pro&ides new #rowth opportunities for -ais. These acuisitions #i&e -ais a stron#

foothold in two of the worldBs most attracti&e hi#h!#rowth" low!penetration markets.

This marks the (e#innin# of the new world of -ais a world (e'ond &oice" and

(e'ond (orders

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M&@is in INDONESIA

+n 64th April 677=" -ais acuired =1J of PT ?atrindo Telepon eluler. -ais is

currentl' in the middle of rollin# out a a&a wide network to esta(lish the compan' as a

national operator. Th initial launch phase encompasses 1"877 0T" pro&idin# (oth 6G and

8G ser&ices. ?T epects to ha&e up to :57 emplo'ees (' launch date and to increase

si#nificantl' upon launchin#. M&@is in Indi&-ais completed the acuisition of a 9:J

stake in Aircel on -arch 61" 677@. Currentl'" Aircel has operations in 4 of the 68!telecom

circles of India ! Chennai" Tamil ?adu" Dest 0en#al" +rissa" Assam" ?orth East" ammu

and ashmir" Himachal Pradesh and 0ihar. Aircel launched its ser&ices in 0ihar and

Himachal Pradesh in ,ecem(er 677@ and also recentl' recei&ed the licenses to operate in

the remainin# 1:!telecom circles of India #i&in# it the a(ilit' to (ecome a pan!India pla'er.

-aisB epansion into Indonesia and India is another milestone in our aspiration to (e the

re#ional communications leader of choice. The acuisition of a =1J stake in PT ?atrindo

Telepon eluler 2?T3" Indonesia and a 9:J euit' interest in Aircel" India pro&ides new

#rowth opportunities for -ais. These acuisitions #i&e -ais a stron# foothold in two of

the worldBs most attracti&e hi#h!#rowth" low!penetration markets. This marks the

(e#innin# of the new world of -ais a world (e'ond &oice" and (e'ond (orders. -AP

-ais in Indonesia +n 64th April 677=" -ais acuired =1J of PT ?atrindo Telepon

eluler. -ais is currentl' in the middle of rollin# out a a&a wide network to esta(lish the

compan' as a national operator. The initial launch phase encompasses 1"877 0T"

pro&idin# (oth 6G and 8G ser&ices. ?T epects to ha&e up to :57 emplo'ees (' launch

date and to increase si#nificantl' upon launchin#. -ais in India -ais completed theacuisition of a 9:J stake in Aircel on -arch 61" 677@. Currentl'" Aircel has operations in

4 of the 68 telecom circles of India ! Chennai" Tamil ?adu" Dest 0en#al" +rissa" Assam"

?orth East" ammu and ashmir" Himachal Pradesh and 0ihar. Aircel launched its ser&ices

in 0ihar and Himachal Pradesh in ,ecem(er 677@ and also recentl' recei&ed the licenses to

operate in the remainin# 1: telecom circles of India #i&in# it the a(ilit' to (ecome a pan!

India pla'er. Aircel epects to a##ressi&el' #row its su(scri(er (ase in India and is

de&elopin# a (road ran#e of new propositions for its customers ! from (randin#" to

increased network co&era#e" to inno&ati&e product and ser&ice offerin#s" to refreshin#

86


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customer eperience. As of 81st ,ecem(er 677@" Aircel ser&es more than :.= million

su(scri(ers with a network comprisin# of almost :"777 0T. Aircel continues to (e the

market leader in Tamil ?adu and Chennai circle. AircelBs network pro&ides 6G and GPR

ser&ices" and is E,GE capa(le. Aircel is also currentl' in the process of conductin# 8G

Trials across different cities in India. In addition" Aircel is the first cellular operator in India

to launch wireless Internet ser&ices usin# Di-A technolo#'. It aims to immediatel'

etend its Di-a co&era#e to o&er 67 cities to ser&e enterprise (road(and customers. +&er

the net few uarters" India is epected to add new su(scri(ers at the rate of = to @ million

per month. India offers hu#e opportunities for Aircel #i&en the current low mo(ile

penetrations le&els as well as challen#es in terms of its #eo#raphic spread and low ARP

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Marketing Strategy of Aircel

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