Quality Management Practices in the Growing Telecom Industry – An

Industrial Insight
Nadeem Kureshi
Center for Advanced Studies in Engineering, Islamabad, Pakistan.
nadeemk@msu.edu

Ahmad Sajjad
Air University, Islamabad, Pakistan.
sajjads5@yahoo.com

Abstract

Quality Management has made significant inroads into Telecom industry worldwide.
Initiatives like TL 9000 Telecom Quality Management System aim to provide “a
consistent set of quality expectations to drive efficiency and performance” in telecom
industry worldwide. Companies are adopting various quality tools in this sector and
even the latest Quality Management initiatives like Six Sigma are being used.

Telecom industry is however in its growing stage and reliable data on adoption of
Quality Management in this industry, particularly in developing economies, has not
been drawn up.

An extensive literature review has been done to explore the contributions addressing
initiatives and issues in Quality Management in Telecom businesses. In parallel,
Telecom business firms in Pakistan are investigated for their current and planned
Quality Management Initiatives, including TL 9000. The primary and expected
outcomes of current and planned Quality Management programs and initiatives have
also been explored.

Telecom Industry in developing economies is attracting huge FDI (Foreign Direct

Investment) in Pakistan and India, and in other developing countries; and the trend
is expected to continue. The result of this study will contribute towards:

• Decision making knowledge required by current and potential investors.

• Provision of Industrial insight for practitioner and researchers worldwide.
• Addition to Sector Specific Quality Management Body of Knowledge.

Keywords

Telecom Business Management, TL-9000, Quality Management, Developing

economies, FDI.

Introduction

Pakistan’s telecom sector has registered unprecedented population adjusted growth in the last few
years. With huge revenue generation for operators, huge FDI in this sector and large scale job
generation, this has created a very competitive environment; the outcome for which is an industry-
wide focus on Quality of Service and quality practices.

Growth in Pakistan’s telecom sector

Pakistan has witnessed one of the fastest and largest telecom sector population adjusted growth in the
world over the last 7 years. Pakistan’s telecom industry has attracted a net Foreign Direct Investment
(FDI) of approximately 6.6 billion US dollars in the period 2001-2008 (Economic Survey of Pakistan,
2007-08). The sector has witnessed a 27.3% growth in Reinvested Earnings in FDI in last financial
year. The telecom sector has reported generation of 400,000 indirect jobs from the telecom sector.
(Samarajiva & Lokanathan, 2006) The cellular industry of Pakistan has shown an exceptional annual
growth of 119 percent during 2000-07 in terms of subscribers. An average addition of more than two
million subscribers in a month has been seen in this sector over the last 2 years.

The mobile tele-density of about 50 percent is the prime contributor to the overall tele-density of
around 54 percent in Pakistan. Acquisition of Paktel (89 percent shares) by China Mobile (CM Pak)
at enterprise value (EV) of 460 m US Dollars, and Warid Tel (30 percent share) by Singapore
Telecommunications Ltd (SingTel) for EV of 2.9 b US Dollars speaks volumes of investors interest in
the sector. (BJ; 2008)

Comparison with regional economies

Mobile Penetration and Subscriber CAGR1 compares very favorably to economies in the region:

Thailand Penetration CAGR = 53.2% Subscriber CAGR = 54.7%

Philippines Penetration CAGR =68.8% Subscriber CAGR =72%
Indonesia Penetration CAGR = 66% Subscriber CAGR =66.8%
Pakistan Penetration CAGR =109% Subscriber CAGR =120%
Sri Lanka Penetration CAGR = 50.8% Subscriber CAGR =52%
India Penetration CAGR = 87.8% Subscriber CAGR =90.6%
Table 1. Penetration and Subscription

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

Quality in telecom

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

P
Q= (1)
E
Often, quality is considered in the context of many smaller parts of a larger service, such as the clarity
of voice, connectivity, courtesy of operators etc, and the key issue is, why some fail to perform up to
expectation and others succeed.
1
Compound Annual Growth Rate (CAGR) is a business and
 investing specific term for the geometric mean growth rate on an
annualized basis.
Where, V(t_0) = start value, V(t_n) = finish value, and t_n - t_0 =
number of years.

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

Figure 1. McAdam Framework for clarifying Quality terminologies

Similarly Taylor and McAdam (2003) have observed that Business Improvement (BI) tools and
techniques “have their roots in improving quality and the maintenance of quality systems”.

Defining and Measuring quality in Telecom Sector

How do we distinguish the telecom organizations’ Quality? Quality, in its final analysis, is the
capacity to meet diverse requirements − productive, economical, social − with “concrete and
measurable actions”. The Quality of performances is a basic element to differentiate an organization
within the market. (Franceschini et al., 2007)
Customer relationships Establishing strong relationships with customers thru
partnership arrangements, direct customer contacts and
integration of the plant’s operations with customers
Customer involvement in new product Involvement of customers in the new product
design/introduction design/introduction process
Collection of information on customer The collection of information on customer needs via
needs frequent and close interaction with customers, including
forward looking information, information on the
importance placed by existing customers on several
requirements etc
Dissemination of customer needs within The existence of mechanisms within the organization to
the organization and responsiveness to that disseminate and respond to information on customer
information needs
 Table 2. Customer focus quality management practices (Based on Sousa; 2003)

In particular reference to Service and Customer Satisfaction aspects, Sousa (2003) have suggested the
practices shown in table below; as measuring standard, which are also consistent with much cited
scholarly works like Flynn et al. (1995) and Ahire et al. (1996).

Quality Management and business improvement practices Survey

Building upon the seminal works and in context of this research, a survey was carried out to ascertain
the current status of different business improvement techniques used by telecom companies in
Pakistan. Following is a brief description of the research design of this survey.

Research Design

A list of techniques was generated from various sources including text books and other scholarly
works, limiting it to relatively generic practices. Techniques not yet adopted by businesses in general
and those in research phase were not included. The initial list included 36 techniques. They were then
reduced through Delphi sessions and discussions with experts to fit the three qualification criteria
discussed above. Besides this, the opinion of experts in scholarly publications (for example see
Taylor and McAdam; 2003; justifying limited diffusion of IIP in UK) was also considered. The list
subsequently included the following 20 techniques.

TL-9000, Benchmarking, Balanced Scorecard, Business Process Reengineering (BPR), Corporate

Social Responsibility (CSR), Customer Surveys, Employee Suggestion Scheme, Improvement
Teams, Knowledge Management, Lean, Mission and Vision Statements, Plan-Do-Check-Act
(PDCA), Quality Function Deployment (QFD), Quality Management System (QMS), Six Sigma,
Supplier Development, Supplier Evaluation, SWOT Analysis, TQM, 5S.

Questionnaire Administration

First, a covering e-mail and survey were mailed to the sample of 71 managers of registered telecom
companies in Pakistan. Ten days after the initial mailing, a reminder postcard was sent to non-
respondents. One month after the initial mailing, a second covering e-mail and survey were sent to the
remaining non-respondents. This was done in line with the total design method suggested by Dillman
(2000). In parallel, attempts were made to administer the same survey in scheduled personal
meetings/interviews. A total of 37 such requests were made where as 7 of the interview requests were
accepted. The whole exercise yielded a total of 22 usable responses; including 7 from structured
interviews (yielding a response rate of 18.9%) and 15 from e-mails responses (yielding a response
rate of 31%). The overall response rate came at 20.3%.

Non-Response Bias
To assess non-response bias in mail surveys, statistical significance difference tests between earliest
and latest responses is used (Krause and Scannel 2002). Using this method, first 5 respondents and
the last 5 respondents were compared. The t-tests of 20 randomly selected survey items found no
statistically significant differences. This result suggests that non-response may not be a problem in
this study.

The Instrument and Results

 The questionnaire, containing a possible 95 questions to be answered, was then designed to assess the
following four aspects of each quality/business improvement technique:

a. Level of Awareness of the manager filling the questionnaire, about each technique.
This corresponding question sought a reply on the perceived awareness of the manager filling
the questionnaire on a liker scale of 1-5; NONE =1, SOMEWHAT=2, AVERAGE=3,
ABOVE AVERAGE=4, HIGH =5.

Following charts show the result of average values of answers.

4.5 4.6

3.92 3.92 4
4 4.5
3.54 4.4
3.23 4.31
3.5

4.2 4.15
3
3.92
2.5
4
2

1.5 3.8
3.77

1
3.6

0.5

3.4
0
Surveys Empoyee Improvement KM Lean
TL-9000 Benchmarking Balanced BPR CSR
Suggestions Teams
Scorecard

5 5
4.46 4.46

4.5 4.5
4.1 4.1

4 3.77 4 3.77
3.53 3.53
3.5 3.5 3.23

3 3
3.23

2.5 2.5

2 2

1.5 1.5

1 1

0.5 0.5

0 0
Mission-Vision- PDCA QMS QFD Six Sigma Mission-Vision- PDCA QMS QFD Six Sigma
Statements Statements

Figure 2. Awareness of Quality Improvement techniques

The figures above show a mean Awareness level of Quality techniques of 3.9 on a scale of 5
(Standard Deviation 0.5124), 95% Confidence Interval for mean between 3.67 and 4.15. This
represents a very high level compared to an average of 3.1 of manufacturing sector. The data has
strong negative (right) skewness, representing high quality knowledge among telecom sector
managers.

b. Use of each technique by the business being represented by the person filling the
questionnaire.
 This corresponding question sought a reply on the use of each technique by the business
being represented by the person filling the questionnaire, the possible answers being YES and
NO.

Following charts show the result of average values of answers.

 NO NO NO
NO NO 15.4 15.4 15.4 NO NO
23.1 NO 23.1 30.8
NO 30.8
38.5
46.2
NO
61.5

YES
YES YES
YES 84.6
84.6 84.6 YES YES
YES 76.9
YES 69.2 69.2
YES 76.9
61.5
53.8
YES
38.5

TL-9000 Benchmarking Balanced BPR CSR Surveys Empoyee Improvement KM Lean

Scorecard Suggestions Teams

NO
15.4 NO
NO NO
NO 23.1
NO NO 30.8 30.8 NO
30.8 NO NO
46.2 46.2 38.5
46.2 46.2

YES YES YES

YES 84.6 69.2 69.2 YES
YES YES
69.2 76.9 YES
53.8 YES 53.8 YES
53.8 61.5
53.8

Mission-Vision- PDCA QMS QFD Six Sigma Supplier Supplier SWOT TQM 5S
Statements Development Evaluation

Figure 3. Use of Quality Improvement techniques

The figures above show a mean Use level of Quality techniques of 67.28% on a scale of 100
(Standard Deviation 13.178), 95% Confidence Interval for mean between 61.1% and 73.4%. This
again represents a very high level compared to an average of 49.684 of manufacturing sector. This
data also has strong negative (right) skewness, representing high use of quality techniques in telecom
businesses.

c. Effectiveness of each technique used.

This corresponding question sought a reply on the perceived effectiveness of each technique
in improving the business, of the manager filling the questionnaire on a liker scale of 1-5;
DON’T KNOW=1, INEFFECTIVE=2, LITTLE EFFECTIVE=3, MODERATELY
EFFECTIVE=4, to HIGHLY EFFECTIVE.

Following charts show the result of average values of answers.

 4. 45
4. 5 4. 5

4
3. 71
4 3. 71 4. 4
3. 75
4. 3
3. 5 4. 3
3. 2
4. 2 4. 2

3 4. 2

2. 5 4. 1

4
2
3. 9
3. 9
1. 5

3. 8
1

3. 7
0. 5

3. 6
0
Sur v e y s E mpoy e e I mpr ov e me nt KM Le a n
T L- 9 0 0 0 B e nc hma r k i ng B a l a nc e d BP R C SR
Sugge s t i ons T e a ms
Sc or e c a r d

4. 3 4. 2
4. 1
4. 16
4. 2 4. 14 4. 1
4 4
4. 1 4 4

4
3. 9
3. 9
3. 8
3. 8 3. 66
3. 71 3. 7
3. 7
3. 6 3. 55
3. 6 3. 54

3. 5
3. 5

3. 4
3. 4

3. 3 3. 3

3. 2 3. 2
M i s s i on- V i s i on- P DCA QM S QFD Si x Si gma Suppl i e r Suppl i e r SWOT T QM 5S
St a t e me nt s D e v e l opme nt E v a l ua t i on

Figure 4. Effectiveness of Quality Improvement techniques

The figures above show a mean Use level of Quality techniques of 3.915 on a scale of 5 (Standard
Deviation 0.3056), 95% Confidence Interval for mean between 3.77 and 4.05. The data in this case is
very close to manufacturing sector value of 4.1 on a scale 0f 5. This data also has strong negative
(right) skewness, representing high effectiveness of quality techniques in telecom businesses.

d. Possible use of each technique in next three years, if not being used now.
This corresponding question sought a reply on the possibility of use of each technique by the
business being represented by the person filling the questionnaire, if it is not being used now.
The possible answers were YES and NO.

These results for this question returned almost evenly divided average responses. While there was a
strong YES response for customer oriented techniques, generally more procedural techniques
returned strong NO response. This can be seen as outlier values with low revenues generating firms
returning more NO responses.

Conclusion

This study has provided an insight into the current business practices in Pakistan’s fledgling and fast
growing telecom industry. This represents a “winger” study of a larger research. The results shown
and briefly analyzed above are highly revealing and represent probably the first formal study carried
out in Pakistan on the quality and business improvement practices of telecom industry, compared with
a parallel study by the main author on manufacturing sector of northern industrial belt of Pakistan.

Mean of Means
Based on the brief individual technique results and analyses above, the mean of means come out to
be:

DATA SET MEAN OF MEANS MEAN OF MEANS

(Telecom) (Manufacturing)
Awareness of Techniques: 3.91 on a scale of 5. 3.14 on a scale of 5.
Use of Techniques: 67.28 on a scale of 100. 49.684 on a scale of 100.
Effectiveness perceived by 3.91 on a scale of 5. 4.10 on a scale of 5.
Adopters:
Future Use expectation by Non- 49.5 on a scale of 100. 45.105 on a scale of 100.
Adopters:
Table 3. Mean of Means comparison with manufacturing sector

Future Research

For future researchers, some avenues of scholarly research that emanate from this study include:
• Further Sector Specific Investigations and Comparisons
• More specific segregation of respondents according to position in business
• Contrasting results with case studies for validation
• Investigation into driving forces of adoptions and lack of them

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