82 Part One 0r.

gani zati ons, Management and the Networked Enterpri se

he leasing of towers has become so wildly popular that other service
providers share the towers with Airtel networks, helping reach any
remote areas such as North Eastern States and Bihar with access of service to
instant calls. Ttr handle the surging demand, Airtel could upgrade its wireless
network, but that would cripple profits. Experts contend that Airtel would have
had to spend billions to bring its network up to BSNL,ls quality. Tb curb excessive
cost of maintaining towers, Airtel moved to a leasing and sharing of towers to
keep its services at lowest costs to these subscribers in these far flung mofussil
and micro interiors.
Not with standing to Airtel's success, its monopoly on the leasing of towers
and keeping costs low for subscribers may be ending. BSNL is planning to out-
source operation and maintenance of its towers and also slashing of its staff and
also se11 bandwidth to salvage its losses and build competitive edge and
increase its profits as it cannot raise costs of the service to stay competitive in
the market. Allowing BSNL efforts to be lean and stay competitive with ali the
infrastructarc aheady in piace to keep services at subsidized costs for sub-
scriber will help BSNL, but will undoubtedly drive some Airtel customers to
BSNL in the hope of finding better reliable and secure network service from a
state owned national carrier. BSNL may further be hedging its bets by offering
-
1ow cost services with 2G and 3G services. With or without the 3G, services if
BSNL provides its services to subscribers at low-cost, the national carrier can
expect the competitive baiance will shift again.
The story of BSNL and Airtel illustrates some of the ways that information
systems help businesses compete-and also the challenges of sustaining a com-
petitive advantage. The telecommunications industry in which both companies
operate is extremely crowded and competitive, with telecommunications com-
panies vying with cable companies, new upstarts, and each other to provide a
wide array of digital services as well as voice transmission. Tb meet the chal-
lenges of surviving and prospering in this environment, each of these compa-
nies focused on a different competitive sffategy using information technology.
The chapter-opening diagtarn calls attention to important points raised by
this case and this chapter. Both companies identified opportunities to use infor-
mation technology to offer new products and services. Airtel offered enhanced
wireless services at low cost with outreach, while BSNL initially focused on
high-capacity, high-quality network services. Airtel's strategy emphasized keep
ing costs 1ow while capitalizing on innovations flom other technology vendors.
BSNIJs strategy involved high up-front costs to build ahigh-capacity network
infrastructure, and it also focused on providing atrigh level of network reliabil-
ity and iustomer service.
This case study clearly shows how difficult it is to sustain a competitive
advantage. By leasing and sharing the tower infrastructure to support its net-
work Airtel's enabled its low tariff to attract millions of new customers and
enhanced its competitive position. But its competitive advantage is likely to
erode if it is forced to invest heavily to further lower its tariff, if BSNI-ls out-
sourcing al1ows it to offer a lowest tariffs, or if BSNL tariffs are competitive.
Changes in service pricing plans may also affect the competitive balance
amorrg the various wireless carriers.