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Project Report

Submitted to: Sir Arif Vaseer Group Members: Umer Abbasi MM123105 Kamran Ghaffar MM123008 Farah Fayyaz MM123076 Lubna Zia MM123082 Ms Management Sciences

In the name of ALLAH, The Most Merciful, the Most Kind

ACKNOWLEDGEMENT
We thankful to ALMIGHTY ALLAH, the benevolent and the most merciful whose name is a source of courage and whose remembrance provides me energies to complete all the tasks assigned to us. May ALLAH show His bounties and mercies upon the Holy PROPHET HAZRAT MUHAMMAD S.A.W and his progeny who guided the making to the righteous path.

We are grateful to our course instructor Mr. Prof Arif Vaseer for his guidance, support help & supervision.

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DEDICATION
We dedicated this report to our parents. Without their patience, understanding, support and most of all love, the completion of that work would not have been possible.

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Table of Contents
History ........................................................................................................................................................... 5 Customer Analysis ......................................................................................................................................... 8 Competitor Analysis .................................................................................................................................... 10 Market/submarket Analysis ........................................................................................................................ 13 Key success factors ..................................................................................................................................... 20 Porter Five Forces ....................................................................................................................................... 20 Environmental analysis ............................................................................................................................... 24 Internal Analysis .......................................................................................................................................... 29 NayaTel (Pvt) ............................................................................................................................................... 29 Value chain analysis .................................................................................................................................... 40 Strategy Development ................................................................................................................................ 43 Recommendations ...................................................................................................................................... 44 References .................................................................................................................................................. 45

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History

The Internet in Pakistan has been available since the early 1990s. According to the International Telecommunications Union there were 133,900 Internet users in 2000 or just 0.1% of the 164 million people in Pakistan. By 2006 use had grown to 12 million users or 7.2% of the population. Telecommunications being one of the fastest growing industries in the country, by 2011 the usage has grown up to 31 million users or 17.6% of the total population. The state-owned Pakistan Telecommunication Company Ltd (PTCL) started offering access via the nationwide local call network in 1995. The country has been pursuing an aggressive IT policy, aimed at boosting Pakistans drive for economic modernization and creating an exportable software industry. Pakistan had almost 128 ISPs in 2007, with customers concentrated in the areas of Islamabad, Karachi, and Lahore. Recently, PTCL has started offering free dial-up Internet service to all its landline subscribers. Broadband access is now available in the major cities, wireless broadband Internet has been introduced by the Wireless local loop (WLL) networks in many major cities, and Worldwide Interoperability for Microwave

Access (WiMAX) networks are being deployed. Fiber to the User (FTTU) triple-services is being offered by NayaTel in the capital city of Islamabad. In 2008, the Pakistan

Telecommunication Authority (PTA) reported over 22 million Internet users. Most Pakistani companies, educational institutes, and government departments maintain web sites, which has further increased the demand for Internet access. An increasing number of Pakistani users are adopting internet social networking. According to a report in 2012, there were over 6 million Pakistanis using Facebook, listing the country as having the 26th largest Facebook population. The advancements in telecommunication technologies have brought tremendous revolution in the conventional mechanism of information accessibility. Broadband has been one of the most penetrative and fastest growing phenomenons for information dissemination in recent times around the world. Latest wireless technologies like Wi-Fi, WiMAX and EvDO, are catching up fast with the conventional wire line methods such as DSL and HFC primarily because they provide a competitive alternative to broadband wire line technologies in geographies that don't qualify for loop access. The inherent nature of wireless doesn't require wires or lines to accommodate the data/voice/video pipeline and can carry

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information across geographical areas that are prohibitive in terms of distance, cost, access, or time. Wireless technologies are no doubt emerging as excellent solutions for connecting distant and underserved areas. According to latest available statistics from Point Topic, there are 429.2 million broadband subscribers in the world as of March 2009 in comparison with 367.7 million in March 2008 which is a net addition of 61.5 Million subscribers with annual growth of 17%. A leading example of such trend is Pakistan where WiMAX has shown unprecedented growth in a short span of time (24.15 million) and South Korea (15.7 million). As highlighted in Figure shown below regional broadband trends reveal that Western Europe has the highest share of subscribers with 25.18% followed closely by South and East Asia which stands at 23.07%.South East Asia is considered as most populous region of the world and at the same time according to Point Topic analysis, has the highest potential for future broadband growth as it has a major portion of population still not approached by the Broadband Stakeholders. It is estimated by Point Topic that global broadband subscribers will reach up to 695 million by the end of year 2013. Global leaders in the broadband market include China (88.08 million), USA (83.37 million), and Japan (30.63 million).

Broadband Providers:

The largest broadband providers are PTCL, LINKdotNET, and Wateen. Smaller DSL providers are Micro Net, NayaTel, Maxcom, Multi Net, World Call, Cyber Net, Gerry's Net, and fiber2home, Witribe, Brain Net, SkyNet and Comsats.

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World Broadband Subscribers Share by Technology (Till March 2009)

World Broadband - Regional Subscribers Share (%) (Till March 2009)

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Customer Analysis
Broadband services in Pakistan have penetrated well in urban areas, still the growth rate is yet to see the enormousness and the main reason is the inaccessibility of broadband services in rural areas. Due to limited investments, broadband service providers are mainly limited to the major cities of the country. Even in larger cities, the quality of service for internet service providers remains a question mark. This is mainly due to old copper media for landline connections which prevents reliable service available for home-users who are 1,500 meters or farer from the telephone exchange he/she is getting services. This constraint compelled investors to bring wireless broadband services such as WiMAX and EvDO which started a fierce competition between fixed vs. wireless broadband operators. Resultantly, coverage, quality of service, marketing and tariffs were positively affected and industry statistics got a new boost as more subscribers started to join the broadband clan. The growing trend of wireless uptake by the general public will shun the dependency on fixed line parameters. Subscriber Status: There are currently 1,140,781 broadband subscribers in Pakistan as compared to 643,892 at the end of December, 2009 showing a 77% growth over the last calendar year. Despite the fact that growth rate lowered in year 2010 as compared to previous year, still, it must be noted that the number of net additions this year (496,889) are more than that of last year (376,712).Currently, broadband penetration of the country stands at 0.66% at the end of December, 2010 which was 0.39% in December 2009, depicting almost 69% growth in just one year. It is also a fact that Broadband is still an emerging phenomenon with inherent constraints associated with it like lack of connectivity to rural areas, low literacy rate, lack of local content and applications etc., therefore, it will take some time for the penetration level to reach the high mark.

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Competitor Analysis

Major Broadband Players: PTCL, Wateen, World Call and Wi-tribe are the biggest broadband operators of Pakistan having a combined share of over 90 percent. PTCL holds 55% market share having 626,748 subscribers with both its DSL and EvDO services topping in their respective broadband technology charts. PTCL has added the highest number of new broadband subscribers as well i.e. 294,481 showing 89% growth rate in the previous year. Wateen, out of the 232,541 subscribers, added 81,526 subscribers in the previous year with a 54% growth rate which is much lesser than its direct competitor PTCL. With 125% growth rate during calendar year 2010 and 122,813 subscribers, World Call has been the standout operator in terms of growth rate whereas it added 68,128 new subscribers as well. Wi-Tribe follows World Call closely in terms of growth rate as it added 40,064 new subscribers depicting 118% growth during the last calendar year. Link Dot Net stays at the fifth spot with 36,391 subscribers up 28% from December 2009.

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Technology Wise Broadband Market Share: Broadband market of Pakistan is a true amalgamation of latest fixed and wireless technologies from around the world. Ranging from primitive fixed line technologies like Cable TV, FTTH and DSL to latest wireless technologies like WiMAX and EvDO, the nation has a variety of options when selecting a suitable broadband package. Figures show a historical view of Pakistans broadband technology evolution over the years. DSL ruled the broadband market of Pakistan since 2007 due to an established fixed line infrastructure by the incumbent, PTCL.HFC and WiMAX broke the monopoly of DSL by getting a combined chunk of almost 37% in the market in 2007-08. The scenario changed again when WiMAX truly established itself as a viable wireless broadband solution and EvDO made a promising start in the market however, HFC declined sharply due to introduction of new technologies. Currently, there exists a fierce competition between fixed and wireless technologies as EvDO and WiMAX are collectively increasing their market share over DSL and other fixed line services.

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Market/submarket Analysis
Broadband in Pakistan: Global leaders in the broadband market include China (88.08 million), USA (83.37 million), Japan (30.63 million), Germany. Internet had been available in Pakistan for over a decade now mainly through dial up connections. With better awareness of keeping one's self informed of the happenings around the world, demand for speed and bandwidth kept on increasing day by day. Broadband made its entry in Pakistan during early 2000, followed by National Broadband Policy in 2004. PTA under its role of a regulator has been facilitating broadband entrant by devising 'lenient' license terms and conditions giving freedom to the operator in terms of selecting appropriate business model, technological choices and easy roll out plans. As a result, one could observe a rich market place both in terms of wired and wireless broadband technologies in Pakistan. These technologies are competing hard with each other to attain better market share. Though in parallel with global trends DSL and Cable modem capture a prevailing market share. However, the recent growing trend of shifting to wireless solutions is paving way for a new dimension which will help in declining the dependency on wire line infrastructure. Analysts and telecom experts foresee that this healthy competition not only provides the operators with freedom of choice in terms of technology dependence but will also ultimately benefit the end users by bringing down the tariffs and improving the quality of broadband services in Pakistan. Cost of service has been the biggest barrier to the growth of broadband service in Pakistan. With only a few broadband service providers in the country, competition level was low and tariffs were high. As PTA opened the arena for new entrants, market focus suddenly shifted to new technologies and lower tariffs. Once a forgotten entity, Pakistan suddenly rose to top 5 countries in the world in terms of subscriber growth during 2007-081. PTA as a regulator is ensuring that this upward trend of growth continues by injecting positive reforms into the industry on periodic basis. Formation of Broadband Stakeholder Group (BSG) and active involvement in broadband policy review has strengthened the market. PTA also being a member of Universal Service Fund (USF) board is working closely with USF authorities to devise revolutionary projects for broadband development especially in rural areas. Board of Directors of USF, in the 13th Board Meeting, held on August 28, 2008, gave the approval to launch the programme 'Broadband in un-served urban areas of Pakistan'. Billions of rupees have
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been allocated for this particular programme which shall cover 6 telecom regions divided into two phases. Telecom regions of Faisalabad (pilot project), Hazara, Multan, and Gujranwala, Central and Southern areas shall be provided with broadband connectivity for which PTCL, Wateen and World call have been awarded contracts for provision of broadband in these remote areas. USF projects also include establishment of Educational and Community broadband centers in the project areas.

Broadband growth:

Pakistan has been experiencing astounding proliferation of broadband in the past two years. Broadband subscriber base grew by 146% adding 245,727 subscribers during 2008-09. There are currently 413,809 broadband subscribers in Pakistan as compared to 168,082 in June, 2008. PTCL, Wateen and World Call are major players in the Broadband market of Pakistan having a combined share of over 79%. PTCL leads the race by adding almost 148,000 DSL subscribers showing 248% growth rate in the previous year. Although Wateen added 46,804 subscribers in the previous year, its growth rate is almost similar to PTCL which proves the success of wireless broadband technologies.

Broadband Subscribers (June - 2009):

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This growth trend depicts the fierce competition among the DSL and wireless technologies which is a healthy sign for broadband proliferation in the country. With the expansion of fixed line and wireless technologies, it is believed that the broadband penetration levels of Pakistan will increase over time as well. An estimate by Business Monitor International reveals that Pakistan's broadband Subscribers will reach up to 21 million by end of 2013.

Broadband Penetration:

Broadband is still an emerging technology rather than an established industry in Pakistan, therefore, its penetration level is very low. Currently, Pakistan stands at only 0.26 % in terms of broadband penetration. It may seem a negligible number but it is encouraging to see that the broadband adoption rate is rising exponentially. The reasons for low penetration include the focus of operators on big cities rather than rural areas, low literacy rate, lack of local content and applications and deteriorating standards of fixed line parameters. PTCL owns the biggest broadband coverage area with DSL available in more than 167 cities. Resultantly, PTCL has the highest share in broadband market.

It is imperative from this example of PTCL that broadband penetration is directly related to the network expansion of broadband operators, the more the coverage, the higher the penetration level. Broadband companies are investing heavily in product marketing and promotional campaigns to attract more customers. Broadband connection charges for 1Mbps connection dropped below Rs. 1000/- for the first time in history which is a great incentive for new customers. Mobilink has also started broadband services via its brand Mobilink Infinity in Karachi which has been an instant hit in the city. Emerging companies like Wi-Tribe are even offering free trial periods of up to seven days to catch the attention of potential customers. Intense competition in the market is also compelling the companies to broaden their scale of advertisement in print and electronic media and improve quality of service. Another benefit of this competition has been the reduction of Customer Premises Equipment (CPE) charges which shall be a huge factor in wireless broadband proliferation in Pakistan.

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Broadband technologies in Pakistan:

Pakistan has been a lucrative market for broadband service providers owing to the huge potential it offers especially in the wireless broadband market. Figure below shows a profound view of broadband technology evolution of Pakistan over the years. DSL ruled the broadband market of Pakistan since 2007 due to an established fixed line infrastructure by incumbent, PTCL.

Broadband Subscribers Share by Technology in Pakistan:

HFC and WiMAX broke the monopoly of DSL by getting a combined chunk of almost 37% in the market in 2007- 08. The scenario changed again this year when WiMAX truly established itself as a viable wireless broadband solution and EvDO made a promising start in the market however, HFC has declined sharply due to introduction of new technologies. Detail of broadband technologies in Pakistan along with major operators is given in ensuing paragraphs: The main reason for this enormous success rate is due to PTCL's domination in fixed line service. DSL technology has been offered by PTCL for a long time and more than 76% of DSL subscribers belong to PTCL. Link dot net and World call are catching up by offering affordable tariffs and attractive packages.

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Worldwide interoperability for microwave access (WiMAX):

WiMAX is a telecommunications technology that provides wireless transmission of data using a variety of transmission modes, from point-to-multipoint links to portable and fully mobile internet access. The technology provides up to 3 Mbit/s broadband speeds without the need for cables. Pakistan holds the unique honor of having the first commercial roll out of WiMAX based network in the world by Wateen Telecom (Pvt) Ltd in December, 2007. Since its arrival, WiMAX technology has taken over the Pakistan market by storm and attracted almost 90,000 subscribers in a short span of time. The no wire broadband solution is a huge incentive for customers as they can enjoy triple play services (Cable TV, Voice and Data) without having to deal with three different companies. Mobilink Infinity has also started its service in Karachi using WiMAX offering voice and broadband solution in October 2008 and already established a 19,349 subscriber base. Most recently, Wi-Tribe has also commenced its services in Rawalpindi/Islamabad, Lahore and Karachi promoting its product via extensive media campaign and free trial periods.

Hyber fiber coaxial (HFC):

HFC is a telecommunication technology being utilized mostly by Cable TV providers. It allows optical fiber cable and coaxial cable to be used in different portions of a network to carry broadband content, such as video, data and voice. HFC share has been declining over the past years due to introduction of better technologies like WiMAX, EvDO, FTTx and no significant competition in the market. HFC holds a 9% share in the broadband market as compared to 25% in the 2007-08. World call has been major the player in Cable TV with almost 30,000 subscribers while Wateen also jumped in with its own HFC network and added 6,562 subscribers till June 2009.

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Evolution data optimized (EvDO):

EvDO is a telecommunication standard for the wireless transmission of data through radio signals, typically for broadband Internet access. EvDO is a relatively new technology which is showing a potential for becoming an instant hit as it has already gained a 5% share in the broadband market of Pakistan. Since its commencement, EvDO has been met with tremendous response by the broadband customers as it provides the ultimate facility of Mobile Broadband which means that you can be online anywhere at any time even on the move. World call was the sole player in this technology providing wireless broadband access to the cities of Karachi, Lahore, Gujranwala and Sialkot. PTCL also launched its EvDO services in major cities around the country offering data rates up to 3.1Mbps. PTCL also guarantees an automatic switch over to its CDMA 1x network in case a subscriber enters a non- EvDO service area, thus keeping the promise of always online connection. With two big giants of the telecom industry providing the same technology solution, a fierce competition is expected which would eventually benefit the end customer.

Fiber to the home:

FTTH is a broadband technology that uses optical fiber to replace all or part of the usual metal local loop used for last mile telecommunications. FTTH is a high speed connection capable of carrying huge IP traffic volumes. NayaTel has been providing Triple play Services (Voice, Data, and Video) via FTTH technology to customers for a few years now mainly in Islamabad. With PTCL planning for GPON networks in Islamabad, FTTH is gearing up to become a major entity in the telecom structure of Pakistan.

Cost of service has been considered as a huge factor in the growth and success of any technological service. Broadband has not been an exception here and if we look into the past, primary reason behind a slothful growth in terms of broadband subscribers between 2002-2007 have been high tariffs. Adding more dilemmas to this situation was low-competition which left the subscribers with no choice but to pay extra if they wanted to enjoy broadband at home or business. There had been substantial reduction in Broadband cost of service since 2007 onwards,
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after the incumbent jumped into the market followed by commencement of wireless broadband services by different operators. Therefore, with the introduction of new players in the market and growing demand of broadband connectivity, tariffs have been declining significantly over the past two years. DSL operators have been more inclined towards increasing the bandwidth rather than coming out with low price data limited packages. Although data volumes are unlimited in most of the packages, price still remains on the higher side which restricts a novice to broadband technology from trying it out. If operators could come up with volume based-low cost packages, it would serve as an appetizer for new customers. Once they get addicted to the flavor of an always on high speed broadband connection, they will yearn for more and automatically switch over to relatively high priced packages. Most companies segregate the DSL packages on basis of connectivity speed and vary the prices accordingly to cater for a more diverse range of customers. Most popular package of DSL i.e. 1 MB connection with unlimited data volume is being offered at almost the same price by main competitors like PTCL, Link dot Net, Micronet and NayaTel.

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Key success factors


Key success factors in internet broadband industry are: Brand image Network coverage speed Price (refers to appropriate pricing based on features) Broadband quality Product/service offerings

Porter Five Forces


Michael Porter of the Harvard Business School has identified five basic forces, which together describe the state of competition in an industry. These forces are The intensity of rivalry among competitors The extent to which substitute products present a threat The threat of new entrants to the market The bargaining power of the industrys suppliers The bargaining power of the industrys buyers.

The centre area shown in diagram represents the rivalry in the industry. On the left are the main traditional players in the industry, with an indication that there is a large amount of consolidation occurring between these companies. On the right are the areas in which the market is being fought.

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The intensity of rivalry among competitors:

As in Internet Broad industry, there is competition based on price. If one company can do something as well as another, and for a cheaper price, then the former will have an advantage and thus be successful in competition. In Pakistan, there appears to be RS 1000 per month, which many companies are offering. If we Move to Usage-Based Pricing, many companies are offering the same deal access and basic services, and so those that are doing it more cheaply than others will attract customers. Otherwise, ISPs will have to offer something special to differentiate them from others. As discussed already, guaranteed quality of service is of great importance where real-time traffic is concerned. Although the market is much segmented, there are an enormous number of companies providing Internet services. An explosion in the number of ISPs over the last few years has meant intense rivalry within the industry. Because there is such an enormous growth in the customer base, the

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market is still far from saturation. This is an attraction to still more companies wishing to enter the market.

Threat of Substitute Products:

There is a tremendous attraction for companies other than ISPs to offer Internet access and services, especially if they know they can enter the market at a high-level. Telcos have the resources and Telecommunications know-how to be successful in this industry. They are also aware of the threats of not being a part of this industry, and are entering at tremendous rate, either by acquisition, merging, or simply becoming ISPs. Although many of these new companies will fail to survive in the long run, those that find a niche market and provide satisfactory service will always have sufficient customer base to continue.

Bargaining Power of Suppliers: The suppliers to ISPs are those that own the networks. These tend to be Telcos and backbone providers. Backbone providers generally own what is the absolute backbone of the Internet, and control routing and switching of traffic. Telcos sown the local loop copper pairs, which most customers use to connect to their ISP, the lines that ISPs lease to connect to the Internet, and much of the Internet backbone. Large ISPs are often the suppliers of capacity to smaller companies. Because it is impossible for every ISP to build their own entire network, it is necessary that companies use the existing networks. They have to do this, which gives the suppliers some power. However, because there are many suppliers offering the same service, this competition has led to their power being lessened.

Threat of New Entrants:

Due to the nature of the ISP market, the threat of new entrants is reasonably strong. There are low barriers to entry - all that is needed to become an ISP is a small amount of capital and some technical know-how. Much of the ISPs activity can be outsourced, which can reduce initial
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costs. Regulation in this area is low, meaning that anyone wanting to enter the market can do so easily. Due to the concept of interconnection, companies need not own any sort of network they can use other networks at a price. There have been, and continue to be many new entrants to the market. In the last 18months, the number of ISPs has leveled off. However, there have been a tremendous number of mergers and acquisitions within that time, suggesting that for every merger or acquisition there has been a new entrant. Although many of these new companies will fail to survive in the long run, those that find a niche market and provide a satisfactory service will always have sufficient customer base to continue.

Bargaining Power of Buyers: Although an individual consumer has little or no say about how much an ISP charges, due to the rivalry within the market, ISP generally have to offer their services at reasonable prices. They will lose their customer base if they charge more for a service someone else provides more cheaply. Switching costs are low, and so churn rates are high. Businesses have a little more bargaining power, particularly if they are a significant client of the ISP. However, if a businesss happy with its ISP it is unlikely to change, and because there is essentially no ability to backward integrate; the customers tend to have little bargaining power.

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Environmental analysis
There are many areas in which the Environment may have an effect. For e.g. ISPs are not responsible for content on their networks up to a certain point. If a customer stores offensive material on their web site, the ISP has obligation to know of its existence and to remove it. If another user complains about this material, then the ISP can remove it without the compliance of the owner, or it is seen as a publisher of the material, and then becomes responsible. In Pakistan there is censorship of the Internet, and many users are concerned, and ISPs are working in conjunction with the regulator (PTA) to try to eliminate some content PEST (Political, Economic, Sociological and Technological) analysis is a scan of the outside environment to try to spot changes that might impact upon business. These changes might be seen as opportunities or threats. Political High regulation Responsibility for content Access hospitals Universal service age (changing), to schools, libraries, Economic GDP Recession: bought? Less spent by consumers and providers? Technological Rapidly changing technologies & services Fuelled by the internet: Transport, local loop Disruptive technologies Reliance on technology switching, backbone, Fewer computers

Sociological Language barrier Reluctance to accept new/foreign technology Demography: ethnic mix Geography: urban/rural

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Political:

In Past regulation of the Internet and associated businesses was low in Pakistan. As the Pakistani government does not employ a sophisticated blocking system, a limitation which has led to collateral blocks on entire domains such as Blogspot.com and YouTube.com, it continues to block websites containing content it considers to be blasphemous, anti-Islamic, or threatening to internal security. Pakistan has blocked access to websites critical of the government or the military. In March 2012, the Pakistan government has taken the unusual step of touting for firms it thinks could help build it a nationwide content-filtering service capable of blocking up to 50 million websites. The Pakistan Telecommunications Authority published a request for proposals for the deployment and operation of a national level URL Filtering and Blocking System which would operate on similar lines to China's Golden Shield, or "Great Firewall" Academic and research institutions as well as private commercial entities have until 16 March to submit their proposals, according to the request's detailed 35-point system requirements list. Key among these is the following: "Each box should be able to handle a block list of up to 50 million URLs (concurrent unidirectional filtering capacity) with processing delay of not more than 1 milliseconds" Economical:

In any market, the GDP can be an indicator of the potential uptake of a product or service. However, a high GDP has not necessarily meant high Internet penetration. Since telecommunications liberalization (2003 in Pakistan, 1998 in most of Europe), there has been structural economic change within the sector. There are many new entrants in all involved markets, and incumbents have begun to lose out to new entrants that have been granted use of the incumbents networks.

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Sociological:

A language barrier may be a deterrent to many from the Internet. Although other languages are now making their place on the Internet, there is still a strong bias towards English, as the Internet has its origins in the US. As other languages become commonplace on the Internet, the ISP market will grow in more countries. The reluctance to accept new and foreign technologies has stunted Internet growth in some countries with high GDP. For example, Japan is a very wealthy country with an excellent telecommunications infrastructure, but Internet penetration there has been slow.

Technological:

Internet technologies are developing and improving at an enormous rate. In a feedback loop of sorts, new technologies are fuelling new services, which in turn are fuelling new technologies. Each part of the Internet (backbone pipes, routers, local loop) is becoming faster, temporarily satisfying customer demand. Although many new technologies have been hailed as the killer application(Asynchronous Transfer Mode (ATM), videoconferencing, VoIP), these have not shown the uptake expected of them. The phenomenon of the Internet could not have been predicted, and so it would be folly for an ISP to assume that a new technology capable of totally restructuring the industry may not appear. Such technology would be regarded as disruptive. Disruptive technologies can be seen as those that initially present package of performance attributes that, at the outset, are not valued by existing customers. Although the product area may be established, the disruptive technologies value proposition is usually very different from that which was previously available. When launched, they will be targeted towards a whole new (and non-existing) customer base, one that is happy to pay a lower price and is willing to settle for lower quality.

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Broadband Internet market shares in Pakistan by 2011:

PTCL Wateen World Call Wi-Tribe Qubee

(57%) (15%) (10%) (9%) (3.1%)

LINKdotNET (2.5%) CR4 91 %

Source: (PTA,2011)

Market shares (%) for residential Broadband Internet Markets:

Fixed 49.5

Wireless 50.5

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Internal Analysis NayaTel (Pvt)


Company Introduction: NayaTel (Pvt) Ltd. (NTL) is a sister concern of Micronet Broadband (Pvt) Ltd. (MBL), the company that launched first broadband service in Pakistan in July 2002. Leveraging its rich expertise and experience of broadband, MBL team conceived the idea of a most modern telecom network which could take care of ever growing telecommunication needs of customers and have the capability to cater for bandwidth requirements of next few decades. The idea was transformed into reality when NTL launched South Asia's first fiber to the home (FTTH)/fiber to the user (FTTU) network in Islamabad in September 2006. This real triple play project is unique in its nature as it serves complex networking needs of mission critical businesses yet so simple that it has become a symbol of prestige for quality conscious home users. Covering over 90% areas of twin cities of Islamabad and Rawalpindi, Nayatel's network offers ultra broadband Internet, modern telephony and digital video services to business and home users. Nayatels FTTH network has transformed Islamabad into one of the most connected and optically wired cities of the world. In line with traditions of MBL, NayaTel purely focuses on quality and customer service. In fact, both MBL and NTL have re-written the quality of service parameters in Pakistani context. As we've been a trend setter in broadband, we've also set new quality standards totally aligned with customers' expectations and requirements.

Fair and ethical business is hallmark of our corporate strategy. Customers' confidence earned with hard efforts of last many years is our most prestigious asset and we always go extra mile to protect this asset. This combination makes NTL as most trusted and reliable telecom service provider of twin cities. NTL's team has a passion to make Pakistan a prosperous nation using modern IT enabled and cutting edge technology as tool for development. We strongly believe that our country and society can become a great contributor to the knowledge based economy of 21st century by leveraging the talent and intellect of young generation. And NayaTel provides an information super highway for this talent to access global knowledge repositories and business opportunities, hence contributing towards national development.

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Vision:

To become a role model of trust, set highest standards of quality and add value to the society.

Values:

Honesty Mannerism Simplicity Sacrifice Discipline Knowledge

Focus on Islamabad: We share a keen interest in the effect of the Internet on the way we communicate, learn, play, and work. While some principles in life will never change, others are changing at breath-taking speed. We want to understand this change and be a part of it. We share a desire to bring the best of this global change to Islamabad, to see to it that communities like the ones that we live in are not left behind in 21st century of knowledge and technology. Our heart and home is in Islamabad. Key management of NTL belongs to this city and has a passion for development of the metropolis. We've been successfully meeting the challenge of providing essential broadband services through our sister company, Micronet Broadband throughout Islamabad and Rawalpindi for last many years. Our network brings for residents of Islamabad a whole new level of telecommunication services, equal to or better than any advanced and modern city of the world like Tokyo, Seoul, San Francisco etc.

Focus on Facilities:

NTL is a facilities based carrier. That means we build what we sell. The fiber optic cables are ours. We own them, maintain them and support them.

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Focus on Business:

Business is our bread and butter. Every business gets our top level of service and support. We know you have choices. We know that service often makes the difference. Let us show you how much of a difference it can be.

Support:

We take pride in our customer support. If you have a problem we have a problem. Our monitoring systems maintain a watch on all critical resources 24 hours a day with instant SMS alerts to the on-call engineers if problems arise. Our 24 hour call center will escalate business trouble calls to an engineer immediately on request. Our engineers have decades of operational experience in optical fibers, telecom and Internetworking.

Infrastructure:

We have built utility grade infrastructure. High count fiber optic cables laid in redundant rings, buried at a depth of 4 to 5 ft underground, with triple protection. On top of this, we've round the clock monitoring and patrolling of our cable routes to safeguard and protect the network. We've carrier class points of presence (POPs) with uninterruptible power supplies, generator backup, top notch Metro Ethernet switches, routers, and optics that are reliable, redundant, secure, and fast.

Dedicated Services:

If you need something special, higher bandwidth, TDM services, service in un served areas, or any other related services, talk to us about a dedicated link service. We can engineer a custom service to meet your needs.

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Custom Engineered Services:

If you have a special requirement that hasn't been addressed yet by any service provider, please give us a call. We love technical challenges and working under tight deadlines. If a solution exists we can help you find it. You can create your specifications and build your site from the ground up, fully wired and fiber-ready. NTL now provides businesses access to the fiber ring around the commercial heart of Islamabad, giving access to lightning-speed fiber technology. With our market leader DSL services from Micronet Broadband, we've earned the confidence of thousands of businesses just like yours, and we'll do the same for you.

Existing business portfolio: Nayatel (Pvt) Ltd. is a facilities based carrier providing converged Triple Play services (Voice, Video, and Data) on Pakistan's first Fiber-to-the-user (FTTU) network. Nayatel is an innovative and customer focused company providing a wide range of services and solutions bundled with best technical and customer support. Nayatel's voice solutions best match the requirements of rapidly growing businesses by supporting latest business applications in corporate environment. Besides the main services of Internet, cable TV and telephone, Nayatel also deals in other services like efax, video conference, audio conference, live TV, IVOD and webhosting. Now we will discuss them one by one.

Internet:

For almost all enterprises and even homes, superior-quality, reliable and high-speed Internet access is not a luxury it has become a necessity like any utility service, electricity, water, etc. Nayatel Fiber-To-The-User (FTTU) network brings you astonishingly fast Internet access and would make the accessing of information from the web as fast as accessing your local PC hard drive. Nayatel Broadband Internet provides you light speed access to the Internet backbone. It is amazingly fast, flexible, scalable and reliable. Nothing comes between you and Internet but glass in which your Internet packets travels at the speed of light, i.e., 300,000 km per second.

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Highlights of Nayatel Broadband Internet include:

Bandwidth Starting at 256 Kbps - 100 Mbps Volume based and Unlimited Packages Increased Security Redundant Inter-nation connectivity Dedicated Connections and Un-shared Bandwidth E-mail and Domain Hosting 24-by-7 Network Monitoring Static IP Nayatel fiber optic technology allows your business to meet increased data demands, without having to invest additional Rupees and resources into hardware and software. You also get the scalability and flexibility an agile business needs. Get all the advantages of high-speed Internet, powered by Nayatel fiber optics. Cable TV:

Nayatel cable network originates out of "Dish farms" at our strategically located head-end station where satellite TV signals are received and processed before transmission through Fiber-to-theUser (FTTU) network. The network has built in technical collaboration with Scientific Atlanta, uses the best hardware available from global sources. Nayatel has built a super video head-end from where signals are distributed over Gigabits Metro Ring to offer best of the breed quality video services, so far unseen in Pakistan.

Telephone: Nayatel's Next-Generation-Network (NGN) is new, evolution-oriented; telecommunication network architecture based on packet transport and dedicated control and service layers. The objective of NGN is to have a single network for all telecommunication services and provides a high efficiency and multi-services network. It supports legacy applications of Plain Old Telephony System (POTS) and also new and enriched applications of future like real time video

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telephony, SIP Trunks etc. In terms of quality of service, it provides top notch quality service, high quality voice, no dropped calls and enhanced voice features. Audio and Video conferencing: Nayatel (Pvt.) Ltd. (NTL) a technology oriented service provider offers high tech videoconferencing facility in Pakistan. NTL's Video Conferencing incorporates features and functions of larger systems in a portable, high performance set-top unit for all the small, medium, and large organizations with the option to take service at customer premises and NTL premises. Nayatel Pvt Ltd is pleased to launch the beta version of its new service; audio conferencing that enable you to do group discussion over the telephone call. Communication barriers are eliminated and your concerned ones are at the distance of phone set from you. It ensures effective communication among the group members whether they are students, employees, partners or other customers. 4Ps of marketing at NayaTel:

Products Internet/Data Cable TV Telephone

Place Islamabad & Rawalpindi Islamabad & Rawalpindi Islamabad & Rawalpindi

Price(Rs.) 1,199-136,450 350-4,900 Based on Calls

Promotion Person to person Person to person Person to person

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Strengths: Related Business: NayaTel is already in telecom business and has developed technical and managerial capabilities. Innovation: Broadband is an innovative addition as far as Pakistani market is concerned. It is in line with the policy of the company to tap the markets where consumers needs are not being addressed. Brand Equity: The Company has an established brand name. Extensive distribution channels: NayaTel has extensive distribution channels for the distribution of its new service. Market oriented: Companys comparative advantage lies in already accumulated knowledge, experience and data in the field. Financial muscle: NayaTel has sufficient resources to invest in the new project.

Weaknesses: Unpredictable market: Pakistani market is very unstable. Unskilled workforce: Specialized training is required for workforce and management to cope with new challenges emerging from the introduction of the new service.
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No existing alliances: The Company is making alliances with certain new suppliers for the equipment etc. which, at present it does not have. Low initial returns: Return on investment is initially low. High turnover rates: The Company has not been able to retain good employees for long term. It would also hamper the ability of the company to handle the launch of new service successfully if the turnover rate does not come down.

Opportunities: Expansion: The biggest opportunity in the Pakistani market is that there are certain areas where the services of competitors cannot reach. In those areas there are sufficient people who need the services the company plans to offer. So, there are sufficient unmet needs in the market which can be catered through the service. Growth in the market: The market for information technology /broadband service is growing with the growth of middle income segment in Pakistan. These customers are increasingly demanding better services. Threats: Short product life cycle: The Company would have to continually innovate given the nature of the industry. Face pace of technological developments might render the service obsolete in few years and it might be replaced by more advanced technology. Downturn in economy: The downturn in Pakistani economy might have impact on disposable income of the population which might not be inclined to spend much on the entertainment activities. General well being of economy always has favorable impact on all the businesses. Little potential differentiation: It is expected that other competitors would enter the market. It might start price war between NayaTel and potential competitors. In that case there would be very less differentiation NayaTel would be able to offer given the nature of the service. Increased bargaining power of suppliers: The Company would need vital alliances with suppliers and other partners. They might be suppliers of the competitors. Suppliers

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bargaining power might increase in that case making input costs high and leaving the company in difficult position. Uncertain demand: It is very difficult to estimate the exact demand for the service. There might be variation which could result in losses for the company. Employee retention: NayaTel might lose its key personnel to other competitors. Nayatel Internet Packages: Nayatel Internet Home Packages Package Volume (Upload + Download) 15 Home 15 GB 1 Mbps from 8:00 a.m. to 8:00 GB p.m. Rs. 1,199/Per Month Monthly Charges

3 Mbps from 8:00 p.m. to 8:00 a.m. 18 Home 18 GB 1 Mbps from 8:00 a.m. to @ 8:00 3 GB p.m. Mbps Rs. 1,399/-

Unlimited

Downloads

from 8:00 p.m. to 8:00 a.m. & Sundays 18 Home 18 GB Plus 1 Mbps from 8:00 a.m. to @ 8:00 5 GB p.m. Mbps Rs. 1,699/-

Unlimited

Downloads

from 8:00 p.m. to 8:00 a.m. & Sundays 18 Home 18 GB Ultra 1 Mbps from 9:00 a.m. to @ 7:00 5 GB p.m. Mbps Rs. 1,899/-

Unlimited

Downloads

from 7:00 p.m. to 9:00 a.m. & Sundays 20 GB Home 20 GB Plus 1 Mbps from 9:00 a.m. to 7:00 p.m. Mbps Rs. 2,999/-

Unlimited

Downloads @ 7

from 7:00 p.m. to 9:00 a.m. & Sundays

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Corporate Packages Connect Packages Speed Packages Volume Per Month in 1 GB's Mbps 2 Mbps 3 Mbps 4 Mbps Rate per add. 100 MB

Rs. / Month Connect 20 Connect 20 Connect 40 Connect 40 Connect 60 Connect 65 Connect 95 Connect 145 Connect 190 Connect 290 20 20 40 40 60 65 95 145 190 290 7,300 9,900 13,900 19,900 4,900 8,500 2,500 4,900 17 34 16 30 15 26 25 23 22 20

Connect 385

385

17

Premium Packages

Packages Premium 512 Premium 768

Speed (Kbps) 512 Kbps 768 Kbps

Monthly Charges (Rs.) 24,350/33,000/-

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Premium 1024 Premium 1536 Premium 2048 Premium 4096

1024 Kbps 1536 Kbps 2048 Kbps 4096 Kbps

41,650/55,550/69,950/136,450/-

Service Strategy
Service Quality: Valued customers are cautions for the value of their money and Nayatel being first FTTU provider is giving highest quality service to its users.

Service Features
Nayatel empowers its customers by providing them with:

Flexible and affordable packages Superior user experience Wide network coverage within twin cities. Reliability of service Online service Great customer care Convenient bill payment options

Promotion Strategies
Nayatel is currently doing person to person marketing which is not enough in such competitive industry. Along with this Nayatel should have to do extensive billboard as well as newspaper advertisements. Added to this radio is in these days and can be used as a medium to invite people to use Nayatel broadband .On festivals like Eid special discounts should be given to enhance sales as well as making people aware of the brand and its quality and also time to time promotional campaigns should be running. These few steps taken in the marketing mix of the Nayatel broadband would surely help to boost their sales and increase their market share.

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Value chain analysis


Nayatel is a facilities based carrier. That means we build the network that we operate and sell services associated with it. Nayatel is the first broadband Fiber-to-the-User (FTTU) network in Islamabad, Pakistan. In the first phase a state-of-the-art fiber optic network core was laid down and in the second phase distribution ring was deployed. We have built a ring network that completely encircles the business and residential areas in the metropolis. Our core network is completely redundant and self-healing. The Metro Ethernet services provided by NTL are based on Cisco Systems platform, an optimized, carrier grade switching infrastructure designed specifically to support advanced services over a fiber optic infrastructure. Our data center is equipped with Cisco routers and high end Sun and Dell Servers. Our core switches provide high capacity core functions as well as provide sub-second recovery from many potential network outage events. NTL has deployed Access and NGN platforms from Alcatel and world's best video head-end from Scientific Atlanta to ensure quality and performance requirements of our customers. Our passive optical equipment is supplied by world leaders of component manufacturing, i.e., ADC and Corning.

Fiber networks clearly outweigh all other broadband options in performance, security, and scalability.

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Nayatel Value chain Nayatel's FTTU network deployment is linked with a GIS based in house built application for effective monitoring and trouble shooting. Our Network Monitoring System (NMS) continuously monitors all active components and business customer connections in our network. Any service impacting event generates an instant notification to our on-call engineers. Our 24 hour TAC (Technical Assistance Center) can also escalate problems directly to a level ensuring prompt response.

Nayatel's redundant network enables both large and small companies to concentrate on their endcustomers rather than on IT-intensive management activities. We deliver an unbeatable combination, a fast, secure, reliable network and a tenacious and highly qualified problemsolving professional team with years of Internetworking experience. Nayatel provides one stop solution to meet your need for high-speed Internet access, reliable telephone services with advanced features, point to point circuits or VPNs and digital quality Cable Television. NTL recognizes your need to stay ahead of the curve and provides flexible, reliable and affordable solutions for your business and home use. Nayatel's FTTU network provides scalability, service neutrality while preserving QoS, and manageability, which requires distinct type of Internetworking devices designed to meet demands of carrier fiber infrastructure, while at the
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same time offers level of sophistication that the customer applications and needs demand. Broadband Passive Optic Network (BPON) Nayatel's FTTU network uses Broadband PON (BPON); which is widely used technology to deploy Fiber-to-the-User (FTTU) services. BPON (Broadband PON) is a standard based on APON. It adds support for WDM, dynamic and higher upstream bandwidth allocation, and survivability. Why Fiber-to-the-User (FTTU) services? Internet community finds new and compelling broadband applications continually which drive the insatiable requirement of amount of bandwidth which the users want for Internet services.

FTTU removes the service bottlenecks of Last Mile and First Mile challenges.

Currently in Pakistan optical fibre connectivity is established within PTCL telephone exchanges and between cities. The local loop, i.e., access to customer premises from telephone exchange is all copper, which has limitations in terms of bandwidth and serious quality issues. This 'First Mile' or 'Last Mile' is and will remain a bottleneck that needs to be addressed to enable customers to take advantage of services of 21th century and beyond.

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Strategy Development
Horizontal Integration: Nayatel should have to follow the strategy of horizontal integration by taking the decision of merger or acquisition with any of its one or two rivals. In this way not only skill and assets of company will enhance but its strength in the market in terms of market share will also improve. In order to avoid the danger of substituted services, company may offer attractive packages at affordable rates especially in those areas where other competitors are unable to offer the internet services. Company should offer special packages for students/ education sector since they are the main service users. Broadband market is such a market that is growing and there is no possibility of it to reach saturation. Hence, NayaTel should apply extension strategies like as increasing promotions and finding new markets.

Functional strategies
Develop marketing programs for the segments and works with advertising agency and marketing colleague to execute marketing plan. Work with Marketing Communication team to develop the message, branding and media plan for the complete Nayatel product portfolio. Periodic meetings with all stake holders for implemented marketing strategies review. Liaison with sales/segments/product/pricing teams to design & implement new packages/offers. Manage new initiatives and ongoing projects professionally. Ensure Budget efficiency & devise launch plans/activities vigilantly. Work closely with pricing team to ensure profitability. Corporate events planning & management to promote Nayatel. Developing a Complete Marketing Plan and keep regular track for Managing Marketing Budgets
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Recommendations
Following suggestions may be offered to help the company to maintain its current status:

The first and foremost recommendation for NayaTel is that it should lower its up front charges and aim for people with lower incomes. In this manner, it will be able to generate more sales and increase its profits. Moreover, it will also be able to increase its customers database too.

Company may follow the strategy of horizontal integration by taking the decision of merger or acquisition with any of its one or two rivals. In this way not only skill and assets of company will enhance but its strength in the market in terms of market share will also improve.

The first and foremost recommendation for NayaTel is that it should lower its price and aim for people with lower incomes. In this manner, it will be able to generate more sales and increase its profits. Moreover, it will also be able to increase its customers database too.

Broadband market is such a market that is growing and there is no possibility of it to reach saturation. Hence, NayaTel should apply extension strategies like as increasing promotions and finding new markets.

Youth today like as college and university going students have been noticed to increase their usage of internet. NayaTel should target the youth extensively with new packaging and services to target them.

Local competitors are a big threat for the company. Hence, NayaTel should either form collaborations with them or take over the local competitors to decrease the number of competitors.

The brand should start promotional strategies that are below the line activities. These can be held at universities and college campuses aiming the youth.

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References www.nayatel.pk/ www.pta.gov.pk www.ptcl.com.pk/ http://www.docstoc.com/docs/73352680/NAYATEL http://propakistani.pk/2011/05/30/state-of-broadband-industry-in-pakistan-dec-10/ http://propakistani.pk/2010/06/24/broadband-users-in-pakistan-tops-0-81-million/ http://www.nayatel.pk/fttu_features.php

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