CHAPTER-1

INTRODUCTION
In the year 1882 a 50-line manual telephone exchange was
commissioned in Kolkata, has given beginning to the journey of
telephone service. In 1950 the number of Telephone Exchanges take
control of from princely states was 196.The installed capacity of these
196 exchanges were 13,362 lines with 11,296 working connections.
After independence in the year 1947, the country had about 82,000
telephone connections, which slowly increased up to 3.05 million by
the year 1984. Till 31st December, 1984 postal, telegraph and
telephone services were managed by the Posts and Telegraphs
Department. Telecom Commission was constituted the year 1989. In
the year 1992 Telecommunication sector in India liberalized to bridge
the gap through government spending and to provide additional
resources for the nations

telecom target .In the year1993 The

Telecom industry got an annual foreign investment of Rs 20.6 million.

During the phase of liberalization the telecom sector in India was
under the control of government until the year 1994 and in the same
year National Telecom Policy was announced. License for providing
cellular mobile services granted by the government of India for
Metropolitan cities of Delhi, Mumbai, Kolkata and Chennai. Cellular
mobile service to be duopoly (i.e. not more than two cellular mobile
operators could be licensed in each telecom circle). In 1995 (August)
Kolkata became the first metro to have a cellular network. TRAI
(Telecom Regulatory Authority of India) was formed on January 1997.
The objective to formulate the body is to provide an effective
regulatory

framework

and

adequate

safeguards

competition and protection of consumer interests.

to

ensure

fair

The Government

of India corporatized the operations wing of Dot in 2000 and renamed

Department of Telecom as Bharat Sanchar Nigam Limited (BSNL).In
last 10 years many private operators especially foreign investors
successfully entered the high potential Indian telecom market. Globally
acclaimed operators like Telenor, NTT Docomo, Vodafone, System,
SingTel, Maxis, and Etisalat invested in India mobile operators. India
stands on third position in largest Internet users of which 40% of
Internet used via mobile phones after US and Japan. India ranks one
of the lowest providers of broadband speed as compared countries
such as Japan and Norway. Minimum broadband speed of 256kbit/s
but speed above 2Mbits is still in a nascent stage. Year 2007 had been
declared as Year of Broadband in India. The Indian Telecom Industry
services have widened their area in all the spheres of communication.
Indian Telecom Industry is the fifth largest and fastest growing
industry in the world with 110.01 million connections. The subscriber
base has grown by 40% in 2005. Over the last 3 years, two out of every
three new telephone con006Eections were wireless. The wireless
subscriber base skyrocketed from 33.69 million in 2004 to 62.57
million in FY 2004 -2005. The wireless technologies currently in use '
Indian

Telecom

Industry

'

are

Global

System

for

Mobile

Communications (GSM) and Code Division Multiple Access (CDMA).

There are primarily 9 GSM and 5 CDMA operators providing mobile
services in 19 telecommunication circles and 4 metro cities, covering
more than 2000 towns across the country. And the numbers are still
growing for ' Indian Telecom Industry
In

todays

scenario

Indian

Telecom

industry

is

having

tough

competition in between government, private and foreign companies. As

the base of the telecom sector in the Indian economy has got its roots
and the customer base for the services is having great dimensions,
have given urge to corporate to diversify in this sector. After the

process of LPG the privatization process has also been initiated the
first private operator Bharti Airtel Limited has been formed in June 04
1998 and it to offer fixed line telephony. Bharti Airtel Limited, a group
company of Bharti Enterprises is one of the Asias leading integrated
telecom services providers with its operations in India, Sri Lanka &
Bangladesh. The company is known for being the first mobile phone
company in the world which has outsourced everything except
marketing and sales. Airtel was the first private player in telecom
sector to connect all states in India. It has been regarded as 2nd most
trusted brand in 2008 in a survey conducted by Wall Street Journal in
2008.

1.1 MARKETING STRATEGY A CONCEPTUAL VIEW:

An organization's strategy is a thought process which combines all of
its marketing goals into one comprehensive plan. A good marketing
strategy should be designed through an efficient market research with
proper

focus on the right product mix in order to achieve the

maximum profit potential which will help the company to sustain the
business. The marketing strategy is the key foundation of a marketing
plan.
A marketing strategy is a process which helps an organization to
concentrate its limited resources on the greatest opportunities to
increase sales and achieve a sustainable competitive advantage. Key
concept of marketing strategy should customer satisfaction is the
main goal.
Marketing strategy is defined by David Aaker as a process that can
allow an organization to concentrate its resources on the optimal
opportunities with the goals of increasing sales and achieving a
sustainable competitive advantage. Marketing strategy includes all

basic short term and long-term activities of marketing which deal with
the analysis of the initial strategic

situation, the formulation,

evaluation, selection of market-oriented strategies and therefore

contributes to the goals of the company & its marketing objectives.
Marketing

strategies

of marketing

serve

as

the

plans designed

to

fill

fundamental
market

underpinning

requirement

and

reach marketing objectives. Plans and objectives are generally tested

for measurable results. Normally, marketing strategies are developed
as multi-year plans, with a tactical plan with specific actions to be

accomplished in the current year. Time horizons covered by the marketing

plan vary by company, by industry, and by geographical location,
however, time horizons are becoming shorter as the speed of change in
the environment increases. Marketing strategies are dynamic and
interactive. These are partially planned and unplanned. Marketing
strategy

needs

to

take

long

term

view

and

tools

for

example; customer lifetime value models can be very powerful in

helping to simulate the effects of strategy on acquisition, revenue per
customer and churn rate.
Marketing strategy involves careful and accurate scanning of the
internal and external environments. The former include factors like
marketing
constraints.

mix

modeling,

External

performance

environmental

analysis

factors

and

include

strategic
customer

analysis, competitor analysis, target market analysis, as well as

evaluation of any elements of the economic, technological, cultural,
political/legal environment likely to impact success, A key component
of marketing strategy is often to keep marketing in line with a
company's overarching mission statement.
After completing an exhaustive exploration of the environment,
Company can build a strategic plan to identify business alternatives,

establish challenging goals, determine the optimal marketing mix to

attain these goals and implementation detail, a final step in developing
a strategy marketing is to create a plan to monitor progress and a set
of contingencies if problems arise in implementing the plan.
Marketing Mix Modeling is often used to help determine the optimal
marketing budget and how to allocate across the marketing mix to
achieve these strategic goals. In addition, these models can help
allocate pass through a portfolio of brands and brand management to
create value..
A marketing strategy is most effective when it is an integral component
of firm strategy, defining how the organization will successfully engage
customers, prospects and competitors in the given market. Business
strategies, corporate missions, and corporate goals. As a customer is
the source of company revenue, marketing strategy is closely linked
with sales. A key component of marketing strategy is often to keep in
line with the primary mission of a marketing company.

1.2 PLANNING FOR MARKETING STRATEGY

A company has to have an overall company mission which defines
what the company is all about and what makes it unique. For example,
is the firm concerned with selling consumer goods (B2C), weapons,
heavy machinery (B2B), etc. Remember it is important not to suffer
from marketing myopia, and this is why a business must be defined in
terms of a need that is being satisfied and not an existing product.
The mission statement will also define the culture, values, and
philosophy of the firm. The mission statement provides direction for a
firm so that employees, customers, suppliers, investors, and other
stakeholders know what the organization is about and where it is
headed. If done well, it also serves to motivate and inspire employees.

A good mission statement considers the needs of all stakeholders and

makes it clear that the firm is not only concerned about profit. A large
number of papers and books have been written about corporate social
responsibility (CSR).
A company must have an overall mission of the company that defines
what the company is and what makes it unique. For example, if the
company is in sale of consumer goods (B2C), weapons, heavy
machinery (B2B) etc. It is important not to suffer from marketing
myopia, and this is why a business should be defined in terms of a
need that is being satisfied and not an existing product. The mission
statement also defines the culture, values and philosophy of the
company. The mission statement provides guidance for a firm to
employees, customers, suppliers, investors and other interested parties
know what the organization is and where it goes. If it is properly done,
it also serves to inspire and motivate employees. A good mission of the
company considers the needs of all stakeholders and it is clear that
the firm is not only concerned about profit. Many articles and books
have been written about the corporate social responsibility (CSR).
Marketing strategy consists of two steps, firstly selecting a target
market and secondly to develop the best marketing mix to satisfy this
objective. Finally, tactics are much more specific and provide more
details on topics such as, says: where should I advertise? When should
I go running ads? How do I get distribution in certain types of stores?
Etc. Indeed, the tactics of how to describe the strategies. The resources
required to implement the tactics are budgeted.
Companies should analyze and track what your competitors are doing.
It is important to know the strengths, weaknesses, objectives and
strategies of the competition.

1.3 PROCESS OF MARKETING STRATEGIES: -

Chart 1.1

STEPS OF STRATEGIC MARKETING PROCESS

Marketing is a strategic planning process that aims to establish a
unified purpose and clear direction for all marketing efforts. Their
findings are documented in a marketing plan that is updated
periodically. The five steps in strategic marketing: identifying a
mission; Analysis of the situation; set goals; develop a marketing
strategy; and planning for evaluation

Mission
The first step in strategic marketing is to articulate the reason why the
enterprise exists and how it can benefit Consumers target over the
long term. In particularly, This mission statement is intended to
anticipate the future and describes an Ongoing 'role for the
organization's product, service or expertise. For example, the mission
of an airline might be to Provide Continuing innovation in the global

transportation. A state hospital Could a mission to take the lead in

Improving public health and education.
Situation Analysis
Organizations conducting a situation analysis, also known as a SWOT.

A SWOT analysis is commonly used in marketing and business in general as a

method of identifying opposition for a new venture or strategy. Short for Strengths,
Weaknesses, Opportunities and Threats, this allows professionals to identify all of
the positive and negative elements that may affect any new proposed actions. This
second step in the process of strategic marketing helps administrators
understand can build on resources and the challenges they face.
Strengths and weaknesses are internal factors under the control of the
company. For example, a good image in the fashion press would be a
key force for a dress maker, while a bad relationship with merchants of
clothing would be a weakness. Opportunities and threats arising from
the external environment, such as a strong economy or a new payroll
tax.
Objectives

The third step in strategic marketing is marketing objectives. These are clear,
measurable goals that give decision makers a basis for making choices and
assessing progress. Objectives are typically expressed in terms of one or more
quantitative targets like revenue, profit, sales or market share. Importantly, each
objective must be achievable Within a fixed period of time. For example, aiming
for a five-percent increase in profits might be realistic within a year, but probably
not within one quarter.
Strategy and Evaluation
The fourth step in strategic marketing is the development of the
strategy. It comes to selecting a target market, a different group of
consumers who are highly likely to buy goods. Planners must also

choose implementation tactics specifically effective ways to use the

tools of marketing mix product, promotion, price and distribution to
reach and influence potential buyers. The fifth step, evaluation, means
specifying how, when and by whom these tactics should be monitored
and evaluated over time. 1

1.4 THE 7 PS OF MARKETING:

Once the marketing strategy is being developed, there is a "Seven P
Formula" which is being used to continually evaluate and revaluate
business activities. These seven are: product, price, promotion, place,
packaging, positioning and people. As products, markets, customers
and needs change rapidly, you must continually revisit these seven Ps
to make sure you're on track and achieving the maximum results
possible for you in today's marketplace.
Product:
To begin with, Initial feasibility and screening of the product is the first
step to consider. The analysis within company and the consultant help
to do the screening of the product to understand its basic feature and
its sustainability in the market.

Price:
Price is the another important factor to consider in marketing mix..
Many companies have found that the profitability of certain products
or services does not justify the amount of effort and resources that go
into production. By increasing their prices, they may lose a percentage
of their clients, but the remaining percentage generates a profit on
each sale. Pricing according to the market conditions always leads to
profitability in long run.

Promotion:
The third concept in marketing and sales is to think in terms of
promotion all the time. Promotion includes all forms that tell
customers about products or services and then how to market and sell
to them. Small changes in the way to promote and sell products can
lead to dramatic changes in their results. Even small changes in
advertising can lead immediately to higher sales. Editors often
experienced can increase the response rate from advertising by 500
percent by simply changing the headline on an ad.
Large and small companies across all industries are continually
experimenting with different forms of advertising, promotion and sale
of their products and services. And here's the rule: any method of
marketing and sales that is used today, sooner or later, stop working.
Sometimes it will stop working for reasons that you know, and
sometimes for reasons I will not know. In any case, their methods of
marketing and sales will eventually stop working and will have to
develop new sales, marketing and advertising offers, approaches and
strategies.

Place:
The fourth P in the marketing mix is the place where the product is
being actually put for sell. Develop the habit of reviewing and reflecting
on the exact place where the customer is the seller. Sometimes a
change of place can lead to a rapid increase in sales. One can sell the
product in many different places. Some companies use direct selling,
sending their salespeople to personally meet and talk with the
prospect. Some sell by telemarketing. Some sell through catalogs or
mail. Some sell at fairs or in shops. Some sell in joint ventures with

other

similar

products

or

services.

Some

companies

use

representatives or distributors manufacturers. Many companies use a

combination of one or more of these methods.
In each case, the entrepreneur must make the right choice about the
very best location or place for the customer to receive essential buying
information on the product or service needed to make a buying
decision. What is yours? In what way should you change it? Where else
could you offer your products or services?
Packaging:
Packaging is the fifth element in the marketing mix. Develop the habit
of stepping aside and looking at every visual element in the packaging
of your product or service through the eyes of critical perspective.
Small improvements in packaging or external appearance of the
product or service can often lead to completely different reactions from
their customers. With regard to the packaging of a product one should
think in terms of what the customer sees from the first moment of
contact.
Packing refers to how the product or service displayed externally.
Packaging also refers to the people and how to dress and groom. It
refers to their offices, waiting rooms, brochures, correspondence and
every visual element of your business. Everything counts. Everything
helps or hurts. Everything affects the confidence of its customers
about dealing with you. When IBM began under the direction of
Thomas J. Watson, Sr., concluded that early full eye contact a
customer would have with your company, at least initially, 99 percent
would be represented by vendors IBM. Because IBM was selling
relatively sophisticated high-tech equipment, Watson knew customers
would have to have a high level of confidence in the credibility of the

seller. Thus, he instituted a dress and grooming code that became a

set of rules and regulations within IBM inflexible.
As a result, every salesperson was required to look like a professional
in every respect. Every element of their clothing-including dark suits,
dark ties, white shirts, conservative hairstyles, shined shoes, clean
fingernails-and

every

other

feature

gave

off

the

message

of

professionalism and competence. One of the highest compliments a

person could receive was, "You look like someone from IBM."
Positioning:
The next P is positioning. An organization develops the habit of
thinking continually placed in the hearts and minds of the customers.
How do people think and talk about you when you are not present?
How do people think and talk about your company? What position you
in your market, in terms of the specific words people use when they
describe their offerings to others and yourself?
In the famous book Al Reis and Jack Trout, Positioning, the authors
note how she dresses and thought by its customers is the determinant
of your success in a competitive market. Attribution theory says that
most customers think in terms of a single attribute, either positive or
negative. Sometimes it's 'service'. Sometimes it is "excellence."
Sometimes it is the 'Quality Engineering', as Mercedes Benz.
Sometimes it is the 'Ultimate Driving Machine' as BMW. In each case,
how that attribute is deeply rooted in the minds of your customers and
potential customers determines how you will easily buy your product
or service and how much they will pay.
Develop the habit of thinking about how you could improve your
ranking. Start by determining the position you would like. If you could
create the ideal impression in the hearts and minds of your customers,

what would it be? What you should do in every interaction with the
client to reach their customers think and talk about that specifically?
What changes need to make the way customers interact with today in
order to be seen as the best option for your customers of tomorrow?
People:
The final P of the marketing mix is people. Develop the habit of
thinking in terms of people inside and outside your business who are
responsible for all elements of your marketing and sales strategy and
activities. It's amazing how many entrepreneurs and business people
work very hard to think through every element of the marketing
strategy and marketing mix and then pay little attention to the fact
that each individual decision and policy must be performed by a
specific person, of a specific way. His ability to select, recruit, hire and
retain the right people with the skills and abilities to do the job you
need to do, is more important than everything else together.
In his best-selling book, Good to Great, Jim Collins discovered the most
important factor applied by the best companies was that they first of
all "got the right people on the bus and the wrong people off the bus."
Once these companies had hired the right people, the second step was
to "get the right people in the right seats on the bus."
To succeed in business, you must develop the habit of thinking in
terms of exactly who is going to perform each task and responsibility.
In many cases, you cannot move forward until you can attract and
putting the right person in the right position. Many of the best
business plans ever developed sit on shelves today because [the people
who created them] they cannot find key people who could implement
those plans.

1.5 MARKETING

STRATEGY

FOR

SERVICE

INDUSTRY:
Marketing services are a sub area of marketing that covers the
marketing of goods and services. Marketing of products include the
marketing of fast moving and durable consumer goods (FMCG).
Marketing services typically relate to the marketing of both business to
consumer (B2C) and business-to-business (B2B). Some common
examples of marketing services are in air travel, healthcare, financial
services, telecommunications, all types of hospitality services, car
rental services and professional services.
It is a service, according to Vargo and Lusch (2004), "the application of
specialized competences (knowledge and skills) through actions,
proceedings and actions for the benefit of another entity or the entity
itself. Services are economic activities in rather than tangible
products, offered by one party to another. Providing a service to
recipients, objects or other assets depends on urgent action to achieve
the desired result. exchange for money, time and effort, service
customers expect value access goods, labor, professional skills,
facilities, networks and systems, but usually do not take ownership of
any of the physical elements involved.
Service marketing is a relatively new phenomenon in the domain of
marketing. It gained importance as a discipline towards the end of the
20th century. Services marketing first came into force in the 1980s
when there was debate of whether the marketing of services was
significantly different from that of products, and whether it should be
classified as a separate discipline. Prior to this, services were
considered as an aid to the production and marketing of goods, and
were not deemed as having separate relevance on their own.

The 1980s saw a change in this mindset. As the service sector began to
grow in importance in post-industrial societies and emerged as a major
employer and contributor to GDPs such nations, academics and
marketing professionals began to be seen in the marketing of services
in a new light. Empirical research that brought to light the distinctive
characteristics of services performed. Mid-nineties, marketing services
were firmly entrenched as a significant sub-discipline of marketing its
own empirical research and data, of increasing importance in the
service industry increasingly dominated the economies of the new
millennium. New areas of study in the open field and were the subject
of extensive empirical research. This led to concepts such as the
spectrum of the product service, relationship marketing, service
franchises, customer retention and others.

1.6

MARKETING

STRATEGY

FOR

TELECOM

INDUSTRY:
Developing a successful corporate strategy and marketing that allows
telecommunications companies to build a long-term relationship with
clients is at the heart of long-term success in this rapidly evolving
sector. However, as telecommunications expands industry accelerates
instead,

customers

are

becoming

increasingly

demanding

and

strategies tacos are often poorly aligned with the expectations of

customers that many generic approaches do not translate well in
telecommunications.
IMPLEMENTING STRATEGY IN THE TELECOM INDUSTRY :
Telecom operators in rapidly growing markets and mature are under
high pressure in today's business climate. These changes create
opportunities but there is also growing competition within the industry
and other industries. The delivery model "good enough" and customer

service subscriptions lock is under pressure - telcos must now attract

customer segments with relevant proposals and unique value. At the
same time, operating costs must be brought under control and many
telcos are planning efficiency improvements. Any of these pressures on
its own requires a change to which are not accustomed to. Achieving
both requires major changes in leadership.
Cellular Providers developed their sales and marketing strategy to
analyze its own internal forces and then analyze the current market
conditions. This process helped the cellular providers to create their
marketing and sales strategy to exploit its competitive advantages with
a unique marketing strategy and establish it as a leading service
provider

in

the

nation

for

business

and

consumer

wireless

communications. The company will create momentum through critical

mass and brand recognition. Cellular Providers will monitor the
effectiveness of their marketing efforts in order to determine the return
on advertising investment and trade generated from the various
channels.
Marketing

Strategy

of

the

Current

cellular

providers

involves

maintaining and expanding the company a broad base of customers in

target territories, establishes partnerships with companies of products
and services that can deliver high quality products and invoke their
own organization to gather and implement these solutions Total for
customers. The overall marketing plan for the cellular service providers
is based on the following grounds:

The segment of the market(s) planned to reach.

Distribution channels planned to be used to reach market

segments:

retail

telemarketing.

outlets,

sales

representatives,

and

Share of the market expected to capture over a fixed period of

time.

1.7 MAJOR

TRENDS

CHANGING

THE

WORLD

OF

TELECOMS :
MCE has identified four main areas of pressure for Telecoms:

Chart 1.2
Trend 1. Competition
Competition within the industry
Competition (cooperation + competition) from partner industries
Result

Trend 2. Technology
Technological disruption changes customer behavior and expectations.
Ever-increasing demand for bandwidth Augmented Media Experience
My Media everywhere, anywhere Mobile Money: Shifting your business
model or bring value differently Innovation: Make, buy, or partner?
Trend 3. Customers

Telecom managers and employees may have a technical mindset. But

your customers do not see you as a technology. They see you as a
means of connectivity, or as a convenience. They expect everything on
demand, mobile, for free and will only pay for clear convenience of
usage (where and when I want it, and on what device).

Connect to people

Connect to services

Connect to content

Connect distributed friends, relatives and colleagues

Result

Trend 4. Employees
As a result of pressure from above, people in the telecommunications
industry is facing the need for major changes in the way they work.
But in an industry with a tradition of hierarchy, silos and do things in
a certain way, how do you change? How to act swiftly, spark
innovation, build partnerships, merge with other companies and
become customer-centric?
The probable answers of the questions stated above cover the following
points :
1. Start from a clear, differentiated customer value proposition
2. Leadership to manage change
3. A management talent pool

4. MCE's Senior Associates

Senior Associates can work with individual managers or management

teams to address all people and change management challenges facing
the industries, companies and organizations today. They draw on their
years of experience in senior management and leadership part to help
solve problems and identify "what works" in different circumstances,
countries and cultures. Above all, have led his people through the
challenges of developing new skills and work in a different way. Apply
their knowledge in a wide variety of services including:
1. Open Enrolment Workshops for Individual Managers
2. In-Company Leadership and Management Development Workshops
3. Business Coaching and Mentoring
4. Advice on Organizational Development and Talent Management.
Thus the company needs to formulate the varied strategies to
understand the major trends in the telecom market and also need to
work on various aspects of the business development for the long term
sustainability in the market.

CHAPTER 2
RESEARCH METHODOLOGY
FRAME AND LITERATURE
SURVEY

2.1 INTRODUCTION :
The growth in demand for telecom services in India is not limited to
basic telephone services. India has witnessed rapid growth in cellular,
radio paging; value added services, internet and global communication
by satellite item (GMPCS) services. As observed from international
perspective the agents of change, have been broadly categorized into
economic structure, competition policy and technology. Economic
reforms and liberalization have driven telecom sector through several
transmission channels of which these three categories are of major
significance.
Effective research cannot be accomplished without critically studying
what already exists in the form of general literature and specific
studies. Therefore, it is considered as an important pre-requisite for
actual planning and execution of research project and it helps to
formulate hypotheses and framework for further investigation. In this
work, the survey of literature has been classified into two parts studies related to telecom sector and studies related to marketing
strategies.

As of now, Indias telecommunications sector is now among the most

deregulated ones in the world. It presents potentially lucrative
opportunities for service providers and equipment vendors alike.
American companies that have successfully seized the opportunity are
Agilent,

AT&T

Cisco,

HP,

Hughes

Network

Systems,

Lucent

Technologies, MCI Motorola, Qualcomm, Sprint and Tekelec.

Indian telecommunications today benefits from among the most
enlightened regulation in the region, and possibly in the world. The
sector, as it is the poster-boy for economic reforms, has been among
the chief beneficiaries of the post-1991 liberalization. Unlike electricity,
for example, where reforms have been stalled, telecommunications has
generally been seen as removed from mass concerns, and thus less
subject to electoral calculations. Market-oriented reforms have also
been facilitated by lobbying from Indias booming technology sector,
whose continued success of course depends on the quality of
communications infrastructure.
Despite several hiccups along the way, the Telecom Regulatory
Authority of India (TRAI), the independent regulator, has earned a
reputation

for

transparency

and

competence.

With

the

recent

resolution of a major dispute between cellular and fixed operators,

Indian telecommunications, already among the most competitive
markets in the world, appears set to continue growing rapidly. While
telecom liberalization is usually associated with the post-1991 era, the
seeds of reform were actually planted in the 1980s. At that time, Rajiv
Gandhi proclaimed his intention of leading India into the 21 st
century, and carved the Department of Telecommunications (DOT) out
of the Department of Posts and Telegraph. For a time he also even
considered corporatizing the DOT, before succumbing to union
pressure.

In

compromise,

Gandhi

created

two

DOT-owned

corporations: Mahan agar Telephone Nigam Limited (MTNL), to serve

Delhi and Bombay, and Videsh Sanchar Nigam Limited (VSNL), to
operate international telecom services. He also introduced private
capital into the manufacturing of telecommunications equipment,
which had previously been a DOT monopoly.

BHARTI AIRTEL LIMITED:

Bharti

Airtel

Limited

(Bharti

Airtel

or

the

Company)

was

incorporated on July 7, 1995 under the laws of India for promoting

investments in telecommunication services. Airtel is the First private
operator to offer fixed line telephony in June 04, 1998. Bharti Airtel
Limited, a group company of Bharti Enterprises, is among

Asias

leading integrated telecom services providers with operations in India,

Sri Lanka and Bangladesh. It is the first mobile phone company in the
world to outsource everything except marketing and sales. Bharti is
now the worlds third-largest, single-country mobile operator and fifthlargest integrated telecom operator. Airtel was the first private player in
telecom sector to connect all states of India. Bharti Airtel has been
ranked among the six best performing technology companies in the
world by Business Week. Voted Indias most innovative company in a
survey conducted by The Wall Street Journal in 2008.2nd Most
Trusted Service Brand - Annual Economic Times Brand Equity, Most
Trusted Brands survey

2008. Sunil Bharti Mittal was awarded the

GSM Association Chairmans Award 2008.

2.2 BSNL (BHARAT SANCHAR NIGAM LIMITED):

Bharat

Sanchar

Nigam

Limited

(known

as

BSNL,

India

Communications Corporation Limited) the foundation of Telecom

Network in India was laid by the British sometime in 19th century. The
history of BSNL is linked with the beginning of Telecom in India. In

19th century and for almost entire 20th century, the Telecom in India
was operated as a Government of India wing. It a state-owned
telecommunication company in India. It is the World's 7th largest
Telecommunications Company providing comprehensive range of
telecom services in India. BSNL is also the fourth largest cellular
service provider, with over 63.45 million customers as of March 2010
and the largest land line telephone provider in India. In 2003-2004 the
company received Golden Peacock Award for best corporate social
responsibility, BSNL National Awards 2006 On World Telecom Day 17
May, 2006 New Delhi.Govt.-run Bharat Sanchar Nigam and private
telecom giant Bharti Airtel have bagged Voice Data SAARC Telecom
Growth Engine awards based on their subscriber growth in Internet
and mobile services during the last fiscal, respectively, in India. The
announcement

of

Awards

for

exemplary

implementation

of

e-

Governance for the year 2004-05 has brought in joy and jubilations to
BSNL.

2.3

STUDY
GROWTH

RELATED
AND

TO

TELECOM

DEVELOPMENTS

IN

SECTOR
INDIAN

TELECOM SECTOR: Muller (1990) in his research focuses that the success of the mobile
commerce can be attributed to the personal nature of wireless devices.
Adding to this are its unique features of voice and data transmission
and distinct features like localization, feasibility and convenience. The
sustained growth of the mobile commerce around the world has been
more because of the transfer of technology according to the needs of
local geography.
National Telecom Policy (1999) projected a target 75 million
telephone lines by the year 2005 and 175 million telephone lines by
2010 has been set. Indian telecom sector has already achieved 100

million lines. With over 100 million telephone connections and an

annual turnover of Rs. 61,000 crores, our present tele density is
around 9.1%. The growth of Indian telecom network has been over
30% consistently during last 5 years. According to Wellenius and
Stern (2001) information is regarded today as a fundamental factor of
production, alongside capital and labor. The information economy
accounted for one-third to one-half of gross domestic product (GDP)
and of employment in Organization for Economic Cooperation and
Development (OECD) countries in the 1980s and is expected to reach
60 percent for the European Community in the year 2000. Information
also accounts for a substantial proportion of GDP in the new industrial
economies and the modern sectors of developing countries.
Videsh Sanchar Nigam Limited (VSNL) 16th Annual Report (2002)
India like many other countries has adopted a gradual approach to
telecom sector reform through selective privatization and managed
competition in different segments of the telecom sector. India
introduced private competition in value-added services in 1992
followed by opening up of cellular and basic services for local area to
competition. Competition was also introduced in National Long
Distance (NLD) and International Long Distance (ILD) at the start of
the current decade.
World Telecommunication Development Report (2002) explains
that network expression in India was accompanied by an increase in
productivity of telecom staff measured in terms of ratio of number of
main lines in operations to total number of staff.
Indian Telecommunication Statistics (2002) in its study showed the
long run trend in supply and demand of Direct Exchange Lines (DEL).
Potential demand for telecom services is much more than its supply. In

eventful decade of sect oral reforms, there has been significant growth
in supply of DEL.
Economic Survey, Government of India (2002-2003) has mentioned
two very important goals of telecom sector as delivering low-cost
telephony to the largest number of individuals and delivering low cost
high speed computer networking to the largest number of firms. The
number of phone lines per 100 persons of the population which is
called teledensity, has improved rapidly from 43.6 in March 2001 to
4.9 in December 2002.
Adam Braff, Passmore and Simpson (2003) focus those telecom
service providers even in United States face a sea of troubles. The
outlook for US wireless carriers is challenging. They can no longer
grow by acquiring new customers; in fact, their new customers are
likely to migrate from other carriers. Indeed, churning will account for
as much as 80% of new customers in 2005. At the same time, the
carriers Average Revenue per User (ARPU) is falling because customers
have.
Dutt

and

Sundram

(2004)

stated

that

in

order

to

boost

communication for business, new modes of communication are now

being introduced in various cities of the country. Cellular Mobile
Phones; Radio Paging; E-mail; Voice-mail; Video; Text and VideoConferencing now operational in many cities, are a boon to business
and industry. Value- added hi-tech services, access to Internet and
Introduction of Integrated Service Digital Network are being introduced
in various places in the country.
A study by Jeanette Carless on and Salvador Arias (2004) wireless
substitution is producing significant traffic migration from wire line to
wireless and helping to fuel fierce price competition, resulting in

margin squeezes for both wired line voice tariffs in organization for
Economic Co-operation and Development Countries have fallen by an
average of three percent per year between 1999 and 2003.
T.V. Ramachandran (2005) analyzed performance of Indian Telecom
Industry which is based on volumes rather than margins. The Indian
consumer is extremely price conscious. Various socio-demographic
factors- high GDP growth, rising income levels, booming knowledge
sector and growing urbanization have contributed towards tremendous
growth of this sector. The tool that will tie these things together and
deliver the mobile revolution to the masses will be 3 Generation (3G)
services.
Rajan Bharti Mittal (2005) explains the paradigm shift in the way
people communicate. There are over 1.5 billion mobile phone users in
the world today, more than three times the number of PCOs. India
today has the sixth largest telecom network in the world up from 14th
in 1995, to second largest among the emerging economies. It is also
the worlds 12th biggest market with a large pie of $ 6.4 billion. The
telecom revolution is propelling the growth of India as an economic
powerhouse

while

bridging

the

developed

and

the

developing

economics.
ASEAN India Synergy Sectors (2005) point out that high quality of
telecommunication

infrastructure

is

the

pillar

of

growth

for

information technology (IT) and IT enabled services. Keeping this in

view, the focus of telecom policy is the vision of world class
telecommunication services at reasonable rates. Provision of telecom
services in rural areas would be another thrust area to attain the goal
of accelerated economic development and social change. Convergence
of services is a major new emerging area.

Aisha Khan and Ruche Chaturvedi (2005) explain that as the

competition in telecom area intensified, service providers took new
initiatives to customers. Prominent among them were celebrity
endorsements, loyalty rewards, discount coupons, business solutions
and talk time schemes. The most important consumer segments in the
cellular market were the youth segment and business class segment.
The youth segment at the inaugural session of cellular summit, 2005,
the Union Minister for Communications and Information Technology,
Dayanidhi Maran had proudly stated that Indian telecom had reached
the landmark of 100 million telecom subscribers of which 50% were
mobile phone users. Whereas African countries like Togo and Cape
Verde have coverage of 90% while India manages mobile coverage of
merely 20%.
An overview in Indian infrastructure Report (2005) explains that
Indias rapidly expanding telecom sector is continuing to witness stiff
competition. This has resulted in lower tariffs and better quality of
services. Various telecom services-basic, mobile, internet, national
long distance and international long distance have seen tremendous
growth in year 2005 and this growth trend promises to continue.
Electronics and home appliances businesses are expected to be $ 2.5
bn in revenues by that year. So, driving forces for manufacturing of
handsets by giants in India include-sheer size of India market, its
frantic growth rates and above all the fact that its conforms in global
standards.
Marine and Blanchard (2005) identify the reasons for the unexpected
boom in mobile networks. According to them, cell phones, based on
Global System for Mobile Communication (GSM) standard require less
investment as compared to fixed lines. Besides this, a wireless
infrastructure has more mobility, sharing of usage, rapid profitability.

Besides this, usage of prepaid cards to the extent of 90% simplifies

management of customer base. Moreover, it is suitable to peoples way
of life-rural, urban, and sub-urban subscribers.
Illustrating the lead achieved by Gujarat. According to Business and
Economy (2005) the catalyst for Indian mobile operators in future will
undoubtedly be increased marketing and advertisement expenditure,
along with better deals for mobile phone users like the previously
mentioned full talk time Rs. 10 recharge card, will go a long way in not
only retaining customers but also acquiring the vast market of lowered
customers who are extremely sticky about value for money and have
extremely low loyalties and almost non-existent switching costs.
According to Oliver

Stehmann

(2005)

the telecommunications

industry is characterized by rapid innovation in the service and the

transmission market. The legally protected public or private monopolist
does not have the same incentive to foster innovation as would exist in
a competitive environment. Thus, state intervention based on the
natural monopoly argument neglects dynamic aspects, which are
crucial in the telecommunications sector.
Marketing Whitebook (2005) explains with support of detailed data
that bigger players are close to 20% of the market reach. In CDMA
market, Reliance Infocom and Tata Teleservices are dominating the
scene whereas.
According to Economic Times (2005) Indian mobile phone market is
set to surge ahead since urban India has a teledensity of 30 whereas
rural India has a teledensity of 1.74. It indicates that the market is on
ascent,

with

teleconnectivity.

more

than

85000

villages

yet

to

come

under

Airtel is leader in GSM operators. Between 2003 and 2004, the total
subscriber base of the private GSM operators doubled. It rose from
12.6 million subscribers at the end of March 2003 to 26.1 million by
the

end

of

March

2004.

And

yet

that

100%

growth

rate

notwithstanding, total industry revenue for 2003-04 was around Rs.

8308 crores. Compared to Rs. 6400 crores that industry grossed in
2002-2003, that is an increase of 30%. According to a paper released
by the Associated Chambers of commerce and Industry of India
(2005), it is stated that 30% of the new mobile subscribers added by
the operators worldwide will come from India by 2009. Ten percent of
the third generation (3G) subscribers will be from India by 2011,
Indian handset segment could be between US $ 13 billion and US $ 15
billion by 2016.It offers a great opportunity for equipment vendors to
make India a manufacturing hub. Indian infrastructure capital
expenditure on cellular equipment will be between 10 to 20% of the
investment that will be made by international operators by 2015. The
other proposals included setting up of hardware manufacturing cluster
parks, conforming to global standards and fiscal incentives for telecom
manufacturing among others.
Virat Bahri (2006) explains the viewpoint of Sam Pitroda, the
Chairman of Worldtel that identifies opportunities for investments in
telecommunications. He analyses that there is an increasing role for
telecom in e-governance in India. According to him, technology can be
leveraged to take Indias development to the next level.
According to Snyder (2006) Communications is a process that allows
information to pass between a sender and one or more receivers and
the transfer of meaningful information or ideas from one location to a
second location. Communication is a human process; humans
communicate by sending information between them. On the other

hand, telecommunication is the transmission of data or information

over a distance. Tele is a Greek word meaning at a distance, far off.
Thus, it classifies smoke signals, semaphore flags, lanterns and signal
flares, telegraph systems, televisions, telephones, written letters, and
hand signals as capabilities that support telecommunications. The
problems with these communications forms include reliability, speed of
transmission, and comprehension purposes.
According to Rohit Prasad & V.Sridhar (2007) this is one of the first
such attempts to analyze the tradeoffs between low market power and
economics of scale for sustained growth of mobile services in the
country. Our analysis of the data on mobile services in India indicates
the existence of economies of scale in this sector. We also calculate the
upper bound on the optimal number of operators in each license
service area so that policies that make appropriate tradeoffs between
competition and efficiency can be formulated.
Narinder K Chhiber (2008) says that the mobile telecommunication
technology is evolving rapidly in the world as more people demand
mobile services with longer bandwidth and new innovative services like
connectivity anywhere, anytime for feature like T.V., Multimedia,
Interoperability and seamless connectivity with all types of protocols
and standards. While the 3G services are yet to fully come up serious
discussion on 4G has already started. WLAN hot spot have made
inroads along with 3G to offer an alternative form of mobile access.

2.4 TECHNOLOGY

UPGRADATION

IN

TELECOM

SECTOR:
Uehara

(1990);

King

(1990);

Glynn

(1992);

Mutoh

(1994)

emphasized that technological changes in the telecom and computers

have radically changed the business scenario. In turn, the new

demands of business have incited many telecom based technological

innovations. In order to exploit these innovations for competing in
global markets, business community has been putting pressures on
governments to revise the policy, regulation and structure of the
telecom sector. Several countries across the world have responded by
restructuring the state controlled telecom provider, increasing private
participation and deregulating service provisions.
Business Today (1992) pointed out that due to lack of technical and
financial resources especially of foreign exchange, the DOT generally
lagged behind in its level of technology. Indias indigenization program
in the switching segment carried out by C-DOT was successful with
the introduction of rural exchanges designed especially for Indian
conditions characterized by dust, heat and humidity.
According to Economic Commission for Europe (2000) this
transition of the telecommunication is mainly technology driven. The
borderline between computers and electronics, on the one hand, and
telecommunications, on the other, is disappearing. This union of
technologies has led to the acceleration of the innovation process,
which is constantly bringing forward new products and services.
Besides expanding the market potential, this innovation process has
also given rise to major changes in industry and the institutional
structure.
E Pedersen and Methlie (2002) studied the technology aspect and
explained a comparative view. According to them, a comparison of the
slow adoption of WAP services in Europe with the successful adoption
of comparable I-mode services in Japan and technologically simple
SMS based services in Scandinavia suggest that aggregate and
technology based models are insufficient to explain the mobile service.
Thus, technological models of the supply side need to be supplemented

with the views and impact of perceptions from the demand side of the
mobile commerce end user.
World Telecommunication Development Report (2002) technologies
of mobile telecommunications and internet are going to set the
contours of further technological progress in the current decade. The
most recent initiatives aim at convergence of voice and data received
from multiple sources both web based and real time video streams in
mobile handsets and calling cards have virtual presence possible
almost everywhere overcoming the barriers of distance, topography
and remoteness.
Prithipal Singh (2004) says that with the convergence of technologies,
data services are expected to grow exponentially in the years to come.
Broadband is likely to take a lead in the development of Indian Telecom
Sector. Broadband is growing market and offers immense possibilities
for investment. In Broadband policy, India has envisaged a target of 40
million Internet subscribers and 20 million broadband subscribers by
2010.
According to P.S. Saran (2004) the telecom technology in India has
transformed from manual and electro-mechanical systems to the
digital systems. India has stepped into the new millennium by having
100% electronic switching system. The technological changes have
made way for new services and economics in the provision of telecom
services.
According to Mather (2005) the challenge, of course, is that a
competitor can show up in one of your established markets with new
technology, better people, a better network of companies for support
and a better management style and steal huge chunks of your

business before you can respond. Staying at the forefront of all these
issues will be the only way to stay successful.
GUPTA (1987) examined the factors motivating consumers to buy
durables, the factors considered by them in making the brand choice
are source of information considered, role of family members in
influencing brand choice and to examine consumer satisfaction.
SHANTI R (2005) examined the perceptual dimensions of brand
association with reference to a mobile user. SHASHI KUMAR and
CHAUBE D.S. 2007 studied the awareness level of buyers and their
attitude towards different mobile providers operating in Lakhnau.
The research undertaken by ANAND and HUNDAL (2007) about
comparative buying behavior of rural and urban consumers was with
respect to buying of refrigerators with motivating factors taken as item
of necessity, symbol of social status, advertising influence, brand
reputation and time saving device.
CHIRAG V. ERDA (2008) did a comparative study of rural and urban
buyers in Jamnagar district of Gujarat in buying mobile phones, India,
with motivating factors taken as price, quality, style, functions, and
brand.
ANIRUDDHA AKARTE (2012) says, Telecom industry in India has
witnessed double digit growth in the past ten years. The mobile market
in rural India has significant potential with number of subscribers
anticipated to grow at a CAGR of around 35% during FY 2012 - FY
2014. To make the most of the enormous potential of rural market in
India, companies need to develop specific marketing strategies and
action plans for the rural market.

DR. AMISHI ARORA (2012) has concluded that rural marketing

cannot succeed if the strategies and action plans are merely extension
of urban marketing strategies and plans. In order to make the most of
the untapped rural market in India, companies need to understand the
dynamics of rural consumers to formulate marketing strategies
specifically for rural consumers.
REKHA

JAIN

(2011)

added

Indian

companies,

facing

harsh

competition and having refined their business models to compete in

this environment acquired the necessary expertise to venture abroad,
opportunistically building their businesses. The highly competitive
regulatory policies in India, led to the emergence of innovative
business models and creation of large domestic companies both in
services and infrastructure segment and consequently acquiring the
necessary expertise to foray abroad.

2.5

COMPETITION

IN

INDIA

TELECOM

SERVICE

SECTOR:Melody (1990) points out various concerns for the telecom sector
covering competition as an important one. Competition is considered
more important factor than ownership in introducing efficiency.
Further the orders in which structural adjustments take place
determine the effectiveness.
Donaldson (1994), Jussawala (1992); Jain, (1995); Wellenius
(1995), recognize that developing countries feel the important role a
responsive, business oriented, and technologically advanced telecom
sector plays in the growth of the economy. Many developing countries
accept the limitations of a monolith state monopoly in responding to
the twin challenges of spurring internal growth and competing in a
global economy.

According to Stephen Y. Walters (2003) the telecommunications

industry is being rocked by change fueled by the dawn of the
tremendous success of the internet and its technologies. For quite
some time, there has been competition in the telephony business.
Long-distance rates have seen continuous decreases for two decades
as new carriers sought to capture greater and greater market share.
Local carriers have seen competition for interconnecting the networks
of large corporate customers and for providing them access to longdistance services. So, competition and change are not new issues in
telecommunications.
Shyamal

Ghosh

(2003)

mentions

that

the

most

significant

development since 1999 has been the progressive reduction in tariffs

which has been facilitated by competition through multi operator
environment. The most dramatic reduction in tariff has been from very
high Rs. 16 per minute to Rs. 2 per minute.
N.M. Shanthi (2005) throws light on the factors that contributed to
the growth of telecom sectors. Various initiatives have been taken by
government

in

view

of

liberalization,

privatization

and

de-

monopolization. The trend is expected to continue in the segment as

prices are falling as a result of competition in the segments.
Kushan Mitra (2005) analyses various factors contributing to
competition in Indian Telecom Industry. Besides lowering of prices,
increased efficiency, greater innovation, highly tech industry better
quality services are some of the reasons which are boosting
competition amongst various telecom service providers.
Michael Meltzer (2005) explains that in electronic age, the need to
manage customer relationships for profit is a marketing dilemma that
many telecommunication companies have to face.

McKenna (1991) professes a more strategic view by putting the

customer first and shifting the role of marketing from manipulating the
customer (telling and selling) to genuine customer involvement
(communicating and sharing the knowledge). (Bickert, 1992) Another
narrow, yet relevant, viewpoint is to consider CRM only as customer
retention in which a variety of post marketing tactics is used for
customer bonding or staying in touch after the sale is made.
(Vavra 1992) A more popular approach with recent application of
information technology is to focus on one-to-one relationship with
customers that integrate database knowledge with a long-term
customer retention and growth strategy.
(Peppers and Rogers, 1993) & Shani and Chalasani (1992) define
relationship marketing as an integrated effort to identify, maintain,
and

build

up

network

with

individual

consumers

and

to

continuously strengthen the network for the mutual benefit of both

sides, through interactive, individualized and value-added contacts
over a period of time.
Jackson (1985) applies the individual account concept in industrial
markets to suggest CRM to mean, Marketing oriented toward strong
lasting relationships with individual accounts.
Berry (1995) in somewhat broader terms also has a strategic
viewpoint about CRM. He stresses that attracting new customers
should be viewed only as an intermediate step in the marketing
process. Developing closer relationship with these customers and
turning them into loyal ones are equally important aspects of
marketing. Thus, he proposed relationship marketing as attracting,
maintaining, and {in multi-service organizations} enhancing customer

relationships. Berrys notion of customer relationship management

resembles that of other scholars studying services marketing.
Gronroos (1990), Gummesson (1987), and Levitt (1981) Although
each of them is espouse the value of interactions in marketing and its
consequent

impact

on

customer

relationships,

Gronroos

and

Gummesson take a broader perspective and advocate that customer

relationships ought to be the focus and dominant model of marketing.
For Gronroos (1990) states: Marketing is to establish, maintain and
enhance relationships with customers and other partners, at a profit,
so that the objectives of the parties involved are met. This is achieved
by a mutual exchange and fulfillment of promises. The implication of
Gronroos definition is that customer relationships is the raison de
enter of the firm and marketing should be devoted to building and
enhancing such relationships.
Morgan and Hunt (1994) draw upon the distinction made between
transactional exchanges and relational exchanges by Dwyer, Schurr,
and Oh (1987)57, to suggest that relationship marketing refers to all
marketing activities directed towards establishing, developing, and
maintaining successful relationships.

STUDY RELATED TO MARKETING STRATEGY: Strategy is the fundamental pattern of present and planned objectives,
resources, developments and interactions of organizations with
markets,

competitors

and

other

(Mullins,Walker,Beyd &Larreche, 2002 )

strategy should always specify;
1.

What is to be accomplished?

environmental

factors.

for this reason , a good

2.

Where the product, market, or industries that are to be

focused.

3.

How resources and activities that will be allocated to each

market/ product to gain sustainable competitive advantage.

Marketing is a process for analyzing, planning and managing the

organizations resources while identifying and serving current and
potential client group and their needs profitability.
Reason for developing marketing strategy Dirks & Danniel (1991)
mention that company managers choose to introduce and / or
reemphasize marketing strategy for a number of reasons, which may
range from personal interests to corporate policies. However the reason
usually centers around an opportunity or an identified problem that
the company management needs to explore.
According

Armstrong,

Kotler,Cunningham

&

Mitchell

(2004)

strategic marketing planning are documents that outline in detail the

marketing strategies which will help a company, product or brand to
accomplish its overall business objectives.
Nagasimha Kanagal (2006) in their study focused on marketing aids
in the understanding of consumer needs and wants, which is useful to
implement

profitable

exchanges.

Relationship

marketing

helps

customizing solutions to important customers, more efficiently than

otherwise. Knowledge and application of relationship marketing helps
in achieving customer satisfaction, customer retention and customer
acquisition. Relationship marketing is a tool of furthering the customer
understanding and interactive processes. Relationship marketing
outputs can thus be profitably used, as inputs in product design and
development, want identification, improving selling systems, pricing

strategies. It is one of the supports to systematic action setting in

competitive marketing strategy.
According to Donath (1999) places overemphasis on price and product
as marketing instruments and an under emphasis on place and
promotion. A danger exists that organizations will there for make a
misallocation of organizational resources between the four marketing
mix instruments (Chintaganta & Vikassinh, 1994).

2.6 STUDY RELATED TO CONSUMER BEHAVIOUR: Consumer decision making process is usually guided by already
formed preferences for a particular alternative. This means that
consumers are likely to make the choice between alternatives based on
limited information search activity and without detailed evaluation of
the other alternatives (Alba and Hutchinson, 2000; Chernev,
2003).The researcher found that many decision strategies used by
consumers can change due to person, context and task specific factor
(Dhar, Nowlis and Sherman, 2000).
It is widely accepted that the traditional problem solving approach
involving rational decision making to the study of consumer choice
may not be suitable for all situations, or is at least incomplete to
understand

choice

behavior.

Limited

information

search

and

evaluation of alternatives led to a situation in which consumer choice

is also driven by hedonic considerations (Dhar and Wertenbroch,
2000).

SURVEY PROJECT: Kalavani (2006) in their study analyzed that majority of the
respondents have given favorable opinion towards the services but
some problems exist that deserve the attention of the service

providers. They need to bridge the gap between the services promised
and services offered. The overall customer attitude towards cell phone
services is that they are satisfied with the existing services but still
want more services to be provided.
Seth et al (2008) in their study titled Managing the Customer
Perceived Service Quality for Cellular Mobile Telephone: an Empirical
Investigation analyzed that there is relative importance of service
quality attributes and showed that responsiveness is the most
important

dimension followed by reliability,

customer

perceived

network quality, assurance, convenience, empathy and tangibles. This

would enable the service providers to focus their resources in the areas
of importance. The research resulted in the development of a reliable
and valid instrument for assessing customer perceived service quality
for cellular mobile services.
Kalpana and Chinnadurai (2006) in their study titled Promotional
Strategies of Cellular Services: A Customer Perspective analyzed that
the increasing competition and changing taste and preferences of the
customers all over the world are forcing companies to change their
targeting strategies. The study revealed the customer attitude and their
satisfaction towards the cellular services in Coimbatore city.
All the studies have different dimensions and have covered the various
facets of marketing and have given various interpretations. The present
study is an attempt to more precisely cover the comparison of the two
leading operators of the telecom industry in two different sectors .The
focus of the study is to derive out the significant difference between
the marketing compositions of Airtel & BSNL and also find out the
consumer preference of the same specifically in the Bhopal region.

NOTEWORTHY

CONTRIBUTION

OF

THE

PROPOSED

RESEARCH WORK:
Various scholars have given their findings in the telecom field and have
significantly contributed to the research area related to the telecom
sector. By doing Comparative analysis between the two leaders in the
public and private sector under telecom industry the present research
will be able to give an overview of the strategies related to market and
brand building. The research will be giving a brief description as to
how, with the help of effective market plans and sound techniques, a
company can become a leader in the market and also provide a
relationship model with the help of this a firm can understand that
what are the prospective areas where the strategies have positive and
significant bearings.

2.7 MEANING AND CONCEPT OF RESEARCH

Research comprises "creative work undertaken on a systematic basis
in order to increase the stock of knowledge, including knowledge of
man, culture and society, and the use of this stock of knowledge to
devise new applications." It is used to establish or confirm facts,
reaffirm the results of previous work, solve new or existing problems,
support theorems, or develop new theories. A research project may
also be an expansion on past work in the field. To test the validity of
instruments, procedures, or experiments, research may replicate
elements of prior projects, or the project as a whole. The primary
purposes

of basic

research (as

opposed

are documentation, discovery, interpretation,

to applied
or

research)

the research

and

development (R&D) of methods and systems for the advancement of

human knowledge. Approaches to research depend on epistemologies,
which vary considerably both within and between humanities and
sciences. There are several forms of research: scientific, humanities,

artistic, economic, social, business, marketing, practitioner research,

etc.

2.8 FORMS OF RESEARCH

Scientific research relies on the application of the scientific method, a
harnessing of curiosity. This research provides scientific information
and theories for the explanation of the nature and the properties of the
world. It makes practical applications possible. Scientific research is
funded by public authorities, by charitable organizations and by
private groups, including many companies. Scientific research can be
subdivided into different classifications according to their academic
and application disciplines. Scientific research is a widely used
criterion for judging the standing of an academic institution, such as
business schools, but some argue that such is an inaccurate
assessment of the institution, because the quality of research does not
tell about the quality of teaching (these do not necessarily correlate
totally)
Research in the humanities involves different methods such as for
example hermeneutics and semiotics, and a different, more relativist
epistemology. Humanities scholars usually do not search for the
ultimate correct answer to a question, but instead explore the issues
and details that surround it. Context is always important, and context
can be social, historical, political, cultural or ethnic. An example of
research in the humanities is historical research, which is embodied
in historical

method.

Historians

use primary

sources and

other

evidence to systematically investigate a topic, and then to write

histories in the form of accounts of the past.
Artistic research, also seen as 'practice-based research', can take
form when creative works are considered both the research and the

object of research itself. It is the debatable body of thought which

offers an alternative to purely scientific methods in research in its
search for knowledge and truth.

2.9 STEPS IN CONDUCTING RESEARCH

Research is often conducted using the hourglass model structure of
research. The hourglass model starts with a broad spectrum for
research, focusing in on the required information through the method
of the project (like the neck of the hourglass), then expands the
research in the form of discussion and results. The major steps in
conducting research are:

Identification of research problem

Literature review

Specifying the purpose of research

Determine specific research questions or hypotheses

Data collection

Analyzing and interpreting the data

Reporting and evaluating research

Communicating

the

research

findings

and,

possibly,

recommendations
The steps generally represent the overall process, however they should
be viewed as an ever-changing iterative process rather than a fixed set
of steps. Most researches begin with a general statement of the
problem, or rather, the purpose for engaging in the study. The
literature review identifies flaws or holes in previous research which
provides justification for the study. Often, a literature review is

conducted in a given subject area before a research question is

identified. A gap in the current literature, as identified by a researcher,
then engenders a research question. The research question may be
parallel to the hypothesis. The hypothesis is the supposition to be
tested. The researcher(s) collects data to test the hypothesis. The
researcher(s) then analyzes and interprets the data via a variety of
statistical methods, engaging in what is known as Empirical research.
The results of the data analysis in confirming or failing to reject
the Null hypothesisare then reported and evaluated. At the end the
researcher may discuss avenues for further research.
Rudolph Rummel says, "... no researcher should accept any one or two
tests as definitive. It is only when a range of tests are consistent over
many kinds of data, researchers, and methods can one have
confidence in the results."

2.10

RESEARCH PROCESS:-

This study is a micro level and it will cover specific area of telecom
services provided by BSNL and Airtel. Now a days service sector is
contributing significantly in our GDP. The Indian GDP comprises three
major sections i.e. service sector, industrial sector and agriculture
sector.

The

service

sector

contributing

56%,

industry

sector

contributing 27% and agriculture sector contributing 17% to our GDP.

Telecommunication industry plays a vital role for the development of
our economy. Telecommunication is very helpful in industries, trade,
technology, armed forces and in domestic use. This study will be based
on primary and secondary data. Major source of secondary data are
annual report, budget, statistical report and published document and
the source of primary data will be questionnaire, survey, observation
and opinions. The questionnaire will be filled up from various
respondents in Bhopal city of Madhya Pradesh, India, those who are

using the services of BSNL and Airtel. Both the data will be used in
this study. Apart from these data the marketing strategies of BSNL and
Airtel will be studied which will based on secondary data. The data
which are collected in the study through primary source and
secondary source will be tested by statistical and research tools like
mean, growth rate, standard deviation, chi-square test and co-efficient
of co-relation. These research tools will examine the significance of
data, whether this study is significant or insignificant. This study will
be covered in 8 chapters as per details given in chapterisation. This
study will cover Bhopal city of Madhya Pradesh in India.

2.11

OBJECTIVES

FOR

THE

PROPOSED

RESEARCH

WORK:The research will be conducted while keeping in view the following

objectives.
i.

To analyze the concept of Marketing Strategy.

ii.

To analyze the Marketing Strategy planning process and

implication for the different telecom companies in India.

iii.

To study Marketing Strategy of Bharat Sanchar Nigam

Limited.

iv.

To study Marketing Strategy of Bharti Airtel Limited.

v.

To study comparative analysis of marketing strategy of

Bharat Sanchar Nigam Limited and Bharti Airtel Limited.

vi.

To give suggestions on the basis of findings of the study.

2.12

RESEARCH

METHODOLOGY

FOR

PROPOSED

RESEARCH WORK:This study is a micro level and it will cover specific area of telecom
services provided by BSNL and Airtel. Now a days service sector is
contributing significantly in our GDP. The Indian GDP comprises three
major sections i.e. service sector, industrial sector and agriculture
sector.

The

service

sector

contributing

56%,

industry

sector

contributing 27% and agriculture sector contributing 17% to our GDP.

Telecommunication industry plays a vital role for the development of
our economy. Telecommunication is very helpful in industries, trade,
technology, armed forces and in domestic use. This study will be based
on primary and secondary data. Major source of secondary data are
annual report, budget, statistical report and published document and
the source of primary data will be questionnaire, survey, observation
and opinions.

2.13

HYPOTHESIS

OF

PROPOSED

RESEARCH

WORK: Null Hypothesis of the proposed research work.

H01: There is no significant difference in the Marketing Strategy of
Bharat Sanchar Nigam Limited and Bharti Airtel Limited.
H02: There is no significant contribution of Marketing Strategy in the
development of Bharat Sanchar Nigam Limited.
H03: There is no significant contribution of Marketing Strategy in the
development of Bharti Airtel Limited.

2.14

RESEARCH DESIGN:

For the purpose of research qualitative research design is being used.

The data will be collected with the help of systematic sampling and
relevant statistical tools will be applied to calculate the interpretation.

2.15

LIMITATIONS

OF

THE

PROPOSED

RESEARCH

WORK:Following are the expected limitations of the proposed research work

i.

The study is based on the primary and secondary data

therefore it would be difficult to assert the reliability of
collected data.

ii.

The researched does not belong to the telecommunication

field hence it would be possible that some technical aspects
related to the telecommunication industry may be ignored.

iii.

Generally

companies

do

not

disclose

their

marketing

strategies due to some strategies due to some strategic

issues.

Due

to

this

reason,

data

collected

form

the

respondents may not be reliable and biasness might be seen

in some aspects.

iv.

The area of the proposed research work is very vast hence

it would be difficult to cover all the aspects related to the
research topic.

In addition to the above mentioned limitations, the researched may

face

more

problems

during

the

research

period

because

the

environment and circumstances keep on changing along with time. As

the time passes the environment and circumstances also change.
However the researched will try to conduct the research work honestly
and will try to keep the accuracy in research work.

2.16

EXPECTED

OUTCOMES

OF

THE

PROPOSED

WORK:i.

At the end of the research work it is assumed that the work

will be able to depict the current trend in telecom sector and
the future prospects and challenges.

ii.

The comparative analysis of marketing strategies of the firms

taken under study will surely give an insight of how the
marketing strategies play a leading role in the firms overall
performance as well as the difference in their application at
various stages of product life cycle.

iii.

The study will propose a relationship between the various

marketing strategies opted by BSNL and Bharti Airtel with
the variables which have direct bearing of these strategies.

2.17

JUSTIFICATION

OF

PROPOSED

RESEARCH

TOPIC:By seeing the current volatile environment of the telecom industry in

the present scenario it is imperative to analyze and compare the
marketing strategies of the telecom leaders specifically in the state
areas so as to understand the details of the strategies and the reason
behind to construct the strategy.

CHAPTER 3
INDIAN TELECOM INDUSTRY
AND ITS TRENDS
3.1 ORIGIN

AND

HISTORY

OF

TECOMMUNICATION

INDUSTRY IN INDIA:
The history of Indian telecom can be started with the beginning
of telegraph. The Indian postal and telecom sectors are one of the
worlds oldest. In 1850, the first experimental electric telegraph line
was started between Calcutta and Diamond Harbour. In 1851, it was
opened for the use of the British East India Company. The Posts and
Telegraphs department occupied a small corner of the Public Works
Department, at that point. Consequently, the construction of 4,000
miles (6,400 km) of telegraph lines connecting Kolkata (then Calcutta)
and Peshawar in the north by the side of Agra, Mumbai (Bombay)
through Sindwa Ghats, and Chennai (Madras) in the south, in
addition to Ootacamund and Bangalore was started in November 1853.
William O'Shaughnessy, who pioneered the telegraph and telephone in
India, belonged to the Public Works Department, and worked towards
the development of telecom during this period. A separate department
was opened in 1854 when telegraph facilities were opened to the
community.
Here 1880, two telephone companies namely The Oriental Telephone
Company Ltd. and The Anglo. Indian Telephone Company Ltd.
approached the Government of India to establish telephone exchanges
in India. The permission was refused on the basis that the

establishment of telephones was Government domination and that the

Government itself would undertake the work. In 1881, the Government
later reversed its prior decision and a license was granted to
the Oriental Telephone Company Limited of England for opening
telephone exchanges -,
country

On

28

telephone service was established in the

January

1882,

Major

E.

Baring

Member

of

the Governor General of India's Council declared open the Telephone

Exchanges in Calcutta, Bombay and Madras The exchange in Calcutta
named the "Central Exchange had a total of 93 subscribers in its early
stage. Later that year Bombay also witnessed the opening of a
telephone exchange

3.2 DEVELOPMENT & MILESTONE :

Pre-1902 Cable telegraph

1902 First wireless telegraph station established among Sagar

Island and Sandhead.

1907 First Central Battery of telephones launched in Kanpur.

19131914 First Automatic Exchange installed in Shimla.

1927 Radio-telegraph system between the UK and India,

with Imperial

Wireless

Chain beam

stations

at Khadki andDaund. Inaugurated by Lord Irwin on 23 July by

exchanging greetings with King George V.

1933 Radiotelephone system inaugurated between the UK and

India.

1953 12 channel carrier system introduced.

1960 First subscriber trunk dialling route commissioned

between Lucknow and Kanpur.

1975 First PCM system commissioned between Mumbai City

and Andheri telephone exchanges.

1976 First digital microwave junction.

1979 First optical fiber system for local junction commissioned

at Pune.

1980 First satellite earth station for domestic communications

established at Sikandarabad, [[Uttar Pradesh|U.P.] Noida Sector
62SCMS

1983 First analogue Stored Programme Control exchange

for trunk lines commissioned at Mumbai.

1984 C-DOT established for indigenous development and

production of digital exchanges.

1995

First mobile

telephone service

started

on

non-

commercial basis on 15 August 1995 in Delhi.

1995 Internet Introduced in India starting with laxmi nagar

delhion 15 August 1995.

Development of Broadcasting: Radio broadcasting be initiated in

1927 but became state responsibility only in 1930. In 1937 it was
given

the

name All

India

Radio and

since

1957

it

has

been

called Akashvani. Limited duration of television programming began in

1959, and complete broadcasting followed in 1965. The Ministry of
Information and Broadcasting owned and maintained the audio-visual
deviceincluding the television channel Doordarshanin the country
former to the economic reforms of 1991. In 1997, a self-governing body
was established in the name of Prasar Bharti to take care of the public
service broadcasting under the Prasar Bharti Act. All India Radio and

Doordarshan, which prior were working as media units under the

Ministry of I&B became constituents of the body.
Pre-liberalisation statistics: although all the major cities and towns
in

the

country

were

associated

with

telephones

during

the

British period, the total number of telephones in 1948 numbered only

approximately 80,000. Post independence, growth remained slow
because the telephone was seen more as a status symbol rather than
being a device of utility. The number of telephones grew laid-back to
980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991; the
year economic reforms were initiated in the country.

3.3 LIBERALISATION AND PRIVATISATION :

Liberalization of Indian telecommunication industry in progress1981
when Prime Minister Indira Gandhi signed contracts with Alcatel
CIT of France to join together with the state owned Telecom Company
(ITI), in an endeavor to set up 5,000,000 lines per year. But quickly the
policy was disappointment because of political opposition. Attempts to
liberalize the telecommunication industry were continued by the
following government under the prime-minister-ship of Rajiv Gandhi.
He invited Sam Pitroda, a US-based Non-resident Indian NRI and a
previous Rockwell International executive to set up a Centre for
Development of Telematics(C-DOT) which manufactured electronic
telephone exchanges in India for the first time. Sam Pitroda had a
important role as a consultant and adviser in the development of
telecommunication in India.
In 1985, the Department of Telecom (DoT) was alienated from Indian
Post & Telecommunication Department. DoT was responsible for
telecom services in whole country until 1986 when Mahanagar
Telephone

Nigam

Limited (MTNL)

and Videsh

Sanchar

Nigam

Limited (VSNL) were fixed out of DoT to run the telecom services of
metro

cities(Delhi and Mumbai)

and

international

long

distance

operations correspondingly
The demand for telephones was increasingly and in the 1990s Indian
government was under increasing pressure to open up the telecom
sector for private investment as a part of Liberalisation-PrivatisationGlobalisation policies that the government had to accept to overcome
the rigorous fiscal disaster and resultant balance of payments issue in
1991. Accordingly, private investment in the sector of Value Added
Services (VAS) was permitted and cellular telecom sector were opened
up for competition from private investments. It was during this era
that

the Narsimha

Rao-led

government

introduced

the National

Telecommunications policy (NTP) in 1994 which brought changes in the

following

areas:

ownership,

service

and

regulation

of

telecommunications infrastructure. The policy commence the concept

of telecommunication for all and its vision was to expand the
telecommunication facilities to all the villages in India. Liberalisation
in the basic telecom sector was also envisaged in this policy. They were
also successful in establishing joint ventures between state owned
telecom companies and international players. Foreign firms were
appropriate to 49% of the total venture. The multi-nationals were just
involved in technology transfer, and not procedure making.
Throughout this period, the World Bank and ITU had advised the
Indian Government to liberalise long distance services to liberate the
monopoly of the state owned DoT and VSNL and to permit competition
in the long distance carrier business which would help decrease tariffs
and enhanced the financial system of the country. The Rao run
government instead liberalised the local services, taking the opposite
political parties into self-reliance and assuring foreign involvement in

the long distance business after 5 years. The country was divided into
20 telecommunication circles for basic telephony and 18 circles for
mobile services. These circles were separated into category A, B and C
depending on the value of the revenue in each circle. The government
threw open the bids to one private company per circle along with
government owned DoT per circle. For cellular service two service
providers were permitted per circle and a 15 years license was given to
each provider. throughout all these enhancement, the government did
face oppositions from ITI, DoT, MTNL, VSNL and other labour unions,
but they deal with to keep away from all the obstacle.
In 1997, the government set up TRAI (Telecom Regulatory Authority of
India) which reduced the obstruction of Government in deciding tariffs
and policy creation. The political powers distorted in 1999 and the new
government under the leadership of Atal Bihari Vajpayee was more
pro-reforms and launched better liberalization policies. In 2000,
the government constituted the Telecom Disputes Settlement and
Appellate Tribunal (TDSAT) through an amendment of the TRAI Act,
1997.The primary objective of TDSAT's establishment was to liberate
TRAI from adjudicatory and dispute settlement functions in order to
strengthen the regulatory framework. Any dispute involving parties like
licensor, licensee, service provider and consumers are resolved by
TDSAT. Moreover, any direction, order or decision of TRAI can be
challenged by appealing in TDSAT.The government corporatised the
operations wing of DoT on 1 October 2000 and named it asDepartment
of Telecommunication Services (DTS) which was later named as Bharat
Sanchar Nigam Limited (BSNL). The proposal of raising the stake of
foreign investors from 49% to 74% was rejected by the opposite
political parties and leftist thinkers. Domestic business groups wanted
the government to privatise VSNL. Finally in April 2002, the
government decided to cut its stake of 53% to 26% in VSNL and to

throw it open for sale to private enterprises. TATA finally took 25%
stake in VSNL.
This was an entrance to many foreign investors to get entry into the
Indian Telecom Markets. After March 2000, the government became
more liberal in making policies and issuing licenses to private
operators. The government auxiliary reduced license fees for cellular
service providers and increased the allowable risk to 74% for foreign
companies. Because of the entire factors, the service fees finally
reduced and the call costs were cut greatly enabling every common
middle-class family in India to afford a cell phone. Nearly 32 million
handsets were sold in India. The data reveals the real potential for
growth of the Indian mobile market.Many private operators, such
as Reliance Communications, Tata Indicom, Vodafone, Loop Mobile,
Airtel, Idea etc., successfully entered the high potential Indian telecom
market.
In March 2008 the total GSM and CDMA mobile subscriber base in the
country was 375 million, which represented a nearly 50% growth when
compared with previous year.As the unbranded Chinese cell phones
which do not have International Mobile Equipment Identity (IMEI)
numbers pose a serious security risk to the country, Mobile network
operators therefore balanced the usage of around 30 million mobile
phones (a propos 8% of all mobiles in the country) by 30 April. Phones
exclusive of valid IMEI cannot be linked to cellular operators. 56 years
the average monthly subscribers trappings were around 0.05 to 0.1
million only and the total mobile subscribers base in December 2002
stood at 10.5 millions.
The telephony subdivision is conquered by private-sector and two
state-run businesses. Most companies were created by a recent
revolution and restructuring launched within a decade, directed

by Ministry

of

Communications

and

IT,

Department

of

Telecommunications and Minister of Finance. Seeing as, most

companies gained 2G, 3G and 4G licenses and engaged fixed-line,
mobile and internet business in India. On landlines, intra-circle calls
are considered local calls while inter-circle are measured long distance
calls. Foreign Direct Investment policy which improved the foreign
ownership cap from 49% to 74%.at present it is 100%. Now
Government is working to integrate the whole country in one telecom
circle. For long distance calls, the area code prefixed with a zero is
dialled first which is then followed by the number (i.e. to call Delhi,
011 would be dialled first followed by the phone number). On behalf of
international calls, "00" must be dialled first followed by the country
code, area code and local phone number. The country code for India is
91. Several international fibre-optic associations include those to
Japan, South Korea, Hong Kong, Russia, and Germany. Some major
telecom operators in India consist of Airtel, Vodafone, Idea, Aircel,
BSNL, MTNL, Reliance Communications, TATA Teleservices, Infotel,
MTS, Uninor, TATA DoCoMo, Videocon, Augere, Tikona Digital.
Fixed Telephony
awaiting the New Telecom Policy was announced in 1999, only the
Government owned BSNL and MTNL were permitted to provide landline phone services through copper wire in India with MTNL operating
in Delhi and Mumbai and BSNL servicing all other areas of the
country. Due to the rapid growth of the cellular phone industry in
India, landlines are facing stiff competition from cellular operators.
This has compulsory land-line service providers to become more
competent

and

improve

their

excellence

of

service.

Land-line

connections are now also available on demand, even in high density

urban areas. India has over 31 million main line patrons.

According to data supplier by Minister of State for Communications

and IT Milind Deora, as of 30 November 2012, India has 736,654 base
transceiver stations (2GGSM & CDMA, and 3G). Of those, 96,212 base
transceiver stations supply 3G mobile and data services. Out of India's
640 districts, 610 districts are covered by 3G services as of 30
November 2012.
India is the worlds highest growing industry in the world in provisions
of number of wireless connections after China, with 811.59 million
mobile phone subscribers.
According to the world telecommunications industry, India will have
1.200 billion mobile subscribers by 2013.
Globalization, liberalization and privatization are the three most
spoken words in today's world. These initiatives lined way for all-round
reforms, especially in developing economies like India. These countries
realized

that

development

of

effective

and

efficient

means

of

Communications and information technology is important to push

them against the path of development. The growth of the telecom
sector in India during post-liberalization has been phenomenal. This

research aims to throw light on the factors that contributed to growth

in the segment and presents an insight on the present status of the
industry.
yet before the declaration, many developing countries had started
liberalizing their inner policies to allow efficiency as to affordability as
an reach capability of telecommunication system by 1995, most of the
low income developing countries of the world, made their economies
global, by liberalizing the domestic licensing and important policies on

the whole, to facilitate inflow of foreign capital into the infrastructure

sector, mainly in the telecommunication sector.
Outcomes

in

telecom

revaluation,

with

countries

adopting

liberalization initiates, experiencing a "never-before" growth in the

telephone network, including the penetration levels. Developing
countries today account for Developing countries today account for
49% of the total telephone set of connections in the world. While in
East Asia (including China) the total teledensity grew at a rapid
velocity to reach 27.4 in 2002 the teledensity grew at a slower velocity
in south Asia (Including India), to reach 4.5 in 2002. This is due to
deficiency in government regulatory and licensing policies in the 90s in
most of the South Asian countries. Although was imbalanced
developing in ICT among the developing countries, in individual
enlargement

in

telecom,

country-wise

also

showed

partial

development, where the development in other divisions apart from

cellular was snail-paced. This was due to exceptional growth in the
cellular segment, whose major contribution was in the direction of
urban telephony.

3.4 OBJECTIVES

OF

TELECOMMUNICATION

INDUSTRY :
1.

Policy, Licensing and Coordination matters relating to telegraphs,

telephones, wireless, data, facsimile and telematic services and
other like forms of communications.

2.

International

cooperation

in

matters

connected

with

telecommunications including matters relating to all international

bodies dealing with telecommunications such as International
Telecommunication Union (ITU), its Radio Regulation Board
(RRB), Radio Communication Sector (ITU-R), Telecommunication

Standardization Sector (ITU-T), Development Sector (ITU-D),

International
(INTELSAT),

Telecommunication
International

Mobile

Satellite

Organization

Satellite

Organization

(INMARSAT), Asia Pacific Telecommunication (APT).

3.

Promotion of standardization, research and development in

telecommunications.

4.

Financial assistance for the furtherance of research and study in

telecommunications technology and for building up adequately
trained manpower for telecom programme, includinga.

Assistance to institutions, assistance to scientific institutions

and to universities for advanced scientific study and
research; and

b.

Grant of scholarships to students in educational institutions

and other forms of financial aid to individuals including
those

going

abroad

for

studies

in

the

field

of

telecommunications.
5.

Procurement

of

stores

and

equipment

required

by

the

Department of Telecommunications

3.5 TREND IN INDIAN TELECOM INDUSTRY

India has become one of the fastest growing mobile markets in the
world. The mobile services were commercially introduced in August
1995 in India. In the early 506 years the average monthly subscribers
additions were around 0.05 to 0.1 million only and the total mobile
subscribers stand in December 2002 stood at 10.5 millions. However,
after the number of proactive proposal taken by regulator and licensor,
the monthly mobile subscriber additions increased to around 2 million
per month in the year 2003-04 and 2004-05.

The total number of telephone subscribers has reached 202.74 million

at the end of February 2007. The overall tele-density has increased to
18.26 in February 2007. The total wireless subscriber (GSM CDMA &
WLL (F) base is 162.53 million. Whereas in the wire line segment with
the minor reduction in subscriber base by 0.01 million lines in
February 2007, the whole wire line subscribers are 40.39 million.
On the lines of previous three years, the years 2005-06 also witnessed
a phenomenal growth in the subscriber base for mobile services, and
also increase in the subscriber base of Fixed including WLL (F)
services as well as Internet services, thus building on the development
trend in subscriber stand experienced since mid-1990s.
The mobile Industry crossed the 90.14 million subscriber mark at the
end of the financial year in assessment to the subscriber base of 52.22
million at the end of March, 2005. It further 37.92 million subscribers
in the financial year 2005-06 registering an annual growth rate of
about 72.62%. The subscriber stand of Fixed including WLL (F)
services also grew from 46.19 million at the end of March, 2005 to
50.17 million at the end of March, 2006, registering a growth rate of
about 8.62%.
The Internet subscriber base in the country as of 31st March, 2006
stood at 6.93 million as compared to 5.55 million throughout the
preceding year, and registered an annual growth rate of about 25%.
The teledensity at the end of March, 2006 reached to the mark of 14%
as compared to 9.08% at the end of preceding year recording an
increase of 4.92%.
This annual growth in teledensity is exceptional and this was largely
due to steep increase in mobile subscriber base and the various
innovative tariff plans launched by the mobile service providers. This

growth in tele-density also becomes very significant in view of the fact

that overall increase in tele-density during the 50 years period from
1948 to 1998 on a much smaller population stand was only 1.92%.
Pager Services:Pager communication successfully introduced in India in the year
1995. Pagers were looked upon as devices that presented the much
needed mobility in communication, mainly for businesses. Motorola
was a major player with nearly 80 per cent of the market share. The
other companies included Mobilink, Page link, BPL, Usha Martin
telecom and Easy call. Pagers were generally worn on the buckle or
carried in the pocket.
The business worn out in 1998 with the subscriber base reaching
nearly 2 million. However, the number dropped to less than 500,000 in
2002. The pager companies in India were soon struggling to maintain
their business. While 2-way pagers could have buffered the fall, the
pager companies were not in a position to promote their infrastructure
to get better the ailing market. The Indian Paging Services Association
was powerless to support the industry.
Pager companies in India also offered their services in regional
languages also. But, the end had begun already. By 2002, Motorola
stops

making or servicing pagers. When mobile phones were

commercially introduced in India, the pager had many advantages to

boast. Pagers were smaller, had a longer battery life and were
considerably cheaper. However, the mobile phones got better with time
and continuously upgraded themselves.

MOBILE COMMUNICATION: First mobile telephone service on non-commercial basis started in

India on 48th Independence Day at countrys capital Delhi. The first
cellular call was made in India on July 31st, 1995 over Modi Telstras
Mobile Net GSM network of Kolkata. Later mobile telephone services
are divided into various zones known as circles. Competition has
sourced prices to drop and calls across India are one of the cheapest in
the world.
Most of operator follows GSM mobile system operate under 900MHz
bandwidth few current players started operating under 1800MHz
bandwidth. CDMA operators operate under 800Mhz band, they are
first to introduce EVDO based high speed wireless data services via
USB dongle. In spite of this huge growth Indian telecom sector is hit by
severe spectrum crunch, corruption by India Govt. officials and
financial troubles.
In 2008, India entered the 3G arena with the launch of 3G enabled
Mobile and Data services by Government owned MTNL and BSNL.
afterward from November 2010 private operators in progress to
introduce their services.

Broadband communication:After US, Japan, India stands in third largest Internet users of which
40% of Internet used via mobile phones. India ranks one of the lowest
providers of broadband speed as compared countries such as Japan,
India and Norway. Minimum broadband speed of 256kbit/s but speed
above 2Mbits is still in a nascent stage.
Year 2007 had been declared as Year of Broadband in India. Telcos
based on ADSL/VDSL in India generally have speeds up to 24Mbit
max while those based on newer Optical Fiber technology offer up to

100Mbits in some plans Fiber-optic communication (FTTx). Broadband

growth has been plagued by many problems. Complicated tariff
structure, metered billing, High charges for right of way, Lack of
domestic content, non implementation of Local-loop unbundling have
all resulted in hindrance to the growth of broadband.
Many experts think future of broadband is on the hands of wireless
factor. BWA auction winners are expected to roll out LTE and WiMAX
in India in 2012.

3.6 CONTRIBUTION

OF

TELECOM

IN

SERVICE

SECTOR :
The history of the Indian Telecom sector goes way back to 1851, when
the first operational landlines were laid by the British Government in
Calcutta. All foreign telecommunication companies were nationalized
to form post, Telephone and Telegraph, a monopoly run by the
Government of India.
The Indian Telecom Sector, like most other infrastructure sectors is
controlled by the state. The Department of Telecommunications (DoT),
reporting to the Ministry of Communication (MoC) is the key body for
policy issues and regulation, apart from being a basic service provider
to rest of country. By an act of Parliament, the Telecom Regulatory
Authority of India (TRAI) was formed to be the regulatory agency.The
total number of telephone connections reaches 413.85 million in
February 2009. With this growth, the overall tele-density has reached
35.65 in February 2009 as against 18.26 in February 2007. The total
wireless subscribers (GSM, CDMA & WLL (F) base stood at 391.76
million at the end of March 2009. In the wire line segment, the
subscriber base has increased to 37.96 million in the month of March

2009 as against 37.73 million subscribers in February 2009

registering an increase of 0.23 million.
The total number of telephone connections reaches 452.91 million at
the end of May 2009. With this growth, the overall teledensity has
reached 38.88 at the end of May 2009. The total wireless subscribers
(GSM, CDMA & WLL (F) base stood at 415.25 million at the end of May
2009.
In the wire line segment, the subscriber base has decreased to 37.66
million in the month of May 2009 as against 37.81 million subscribers
in April 2009 registering a small decrease of 0.15 million.
The number of telephone subscribers in India increased to 509.03
million at the end of Sept 09 from 494.07 Million in August 2009,
thereby registering a growth rate of 3.03%. With this, the overall Teledensity in India reaches 43.50. The set target of 500 million telephones
by the end of 2010 has been achieved by September 2009. Wireless
subscriber base enlarged from 456.74 Million in August 2009 to
471.73 Million at the end of September 09 at a monthly growth rate of
3.28%. Wireless Tele-density stands at 40.31. Wireline subscriber base
declined from 37.33 Million in August 2009 to 37.31 Million at the end
of September 09.
This decline is mainly on account of reduction in the wire line
subscriber base of BSNL/MTNL, which lost 0.06 Million subscribers in
the month of September 09. These two PSU operators hold 85.67% of
the Wire line market share. Overall Wire line teledensity is 3.19 Total
Broadband subscriber base has increased from 6.98 million in August
09 to 7.22 million in September 09 thereby showing a growth of 3.29%.
E-mail

is

now

one

of

the

most

frequently

used

types

of

telecommunication. Facsimile (fax) equipment transmits a digitized

exact image of a document over telephone lines. At the receiving end,

the fax machine converts the digitized data back into its original form.

3.6

CURRENT STRUCTURE OF THE INDIAN TELECOM

INDUSTRY:

At present, both public sector players as well as the private sector

players

are

dynamically

catering

to

the

rapidly

growing

telecommunication needs in India. Private participation is permitted in

all segments of the telecom industry, including ILD, DLD, basic
cellular, internet, radio paging, et al. The broad structure of the
telecom industry (in terms of service providers) is represented in the
diagram below:

Chart 3.1

PUBLIC SECTOR:
After the privatization of VSNL in 2002, only two leader PSUs, MTNL
and BSNL operate in India and provide various telecom services. As
noted earlier, MTNL operates in Delhi and Mumbai and BSNL provides
services to the remaining country. In the post-liberalisation era, these

PSUs not only have made significant progress but also have provided
stiff competition to their private counterparts.

PRIVATE SECTOR:
Private operators have played a very vital role in the growth of the
telecommunication industry, primarily in the mobile services. With the
liberalization of the telecom industry, the private sector has been
increasing its foothold in the telecom services space. After the
introduction of NTP-99, the contribution of private players towards
telecom services has witnessed rapid pace. While the private sector is
instrumental in providing both fixed line as well as wireless services, it
is mainly active in the wireless segment. The fixed lines account for
only about 2% of private sector's total subscriber base. While some
private players have a pan-India being there, there are many regional
players that cater to only certain service areas.

CHANGE

IN

MARKET SHARE:

The subscriber base of the public as well as private players has grown
rapidly post-liberalisation. The subscriber base of telecom industry
grew from around 18.68 mn during FY98 to 429.72 mn during FY09
and a important proportion of this growth has emanated from the
private sector. The private players registered a complete growth of
around 339.30 mn in subscriber base during FY98-FY09. This could
be largely attributed to rapid growth in mobile subscriber base of the
private players. With the gradual opening up of the telecom industry,
the private players have been able to garner strength and improve their
hold on the telecom service provision. Further, the introduction of the
New Telecom Policy (NTP-99), which enabled migration in the license
fee payment mechanism from a fixed regime to a revenue-sharing
regime, provided a major boost to private sector players. Moreover,
initiatives such as allotting third and fourth cellular licenses, shifting
to a unified access licensing regime, execution of calling party pays
(CPP) regime, making incoming calls free, also drew significant growth
in the cellular subscriber base.

Graph 3.1

Although the subscriber base of public entities has also expanded, it

has grown at a much lower rate as compared with private players.
During 1998-2008, the subscriber base of PSU operators grew by
merely 71.72 mn. The public sector has witnessed continuous
depletion in its share in the total subscriber base over the years, as it
has been on a comparatively lower growth trajectory.
The share of private sector in the total subscriber base has increased
substantially from 4.7% in FY98 to 79.2% in FY09. Even though these
figures indicate the dominance of the private sector in terms of
subscriber base, it is important to note that the prominence of private
and public sector service providers varies in different segments of the
telecommunication industry.

SEGMENTS

IN THE

TELECOMMUNICATION INDUSTRY:

Telecommunication services in India can be divided into two broad

segments, wireline services and wireless services. While the wireline
services comprise the fixed line telephony, wireless services comprise
mobile, WLL (F) and WLL (M). On the entire, the Indian telecom
industry has made noteworthy progress; however, the source of
emergence of this growth in terms of wireless and wireline segments
has undergone substantial change in the past few years.

Graph 3.2
Market Share FY98 (%)

Market Share FY09 (%)

The wireline segment, which accounted for a major share of the

telecom industry during commencement of the current decade, has
witnessed a decline in its subscriber base in the last 2 years. The
subscribe base of the wireline segment, which reached a peak of 41.54
mn during FY06, has witnessed a declining trend since then. The
subscriber base of the wireline segment has declined to 37.96 mn in
FY09 from its peak in FY06. On the other hand, the growth in
subscriber base of the wireless segment has enlarged substantially
over these years. The subscriber base of the wireless segment has
increased from around 6.70 mn in FY02 to as much as 391.76 mn in
FY09. Over these years, not only the number of wireless subscribers
but also the pace of its growth has increased substantially.
Graph 3.3
Wire line and wireless subscriber Base

Other

telecommunication

services

such

as

internet

services,

broadband services, VSAT, also have developed gradually and have

become an integral part of the Indian telecom industry. Thus, broadly
the Indian telecommunication industry can be classified into the
following segments:

Wireline services

Wireless service: GSM and CDMA

Internet services

Public Mobile Radio Trunked Services

Global Mobile Personal Communication by Satellite (GMPCS)

Very Small Aperture Terminals (VSAT)

Mobile Value Added Services

WIRELINE SERVICES
The wireline segment includes basic wireline services rendered to
households, commercial units and to service supplier such as public
call offices. While the incumbent PSUs have been the dominant players

in wireline service, some private players have been gradually making

their presence felt in this segment. As on March 31, 2008, 5 licensed
private operator groups were providing wireline connections in addition
to the incumbent BSNL and MTNL.
Chart 3.2
Market Share in Terms of Subscriber Base

BSNL and MTNL have been group of actors in the wireline service. still
private players have been allowed to participate in fixed services since
1994, they only have around 13% contributions in the fixed line
subscriber base (as on March 31, 2009). Though private players like
Bharti

and

Reliance

Government-owned

have

BSNL

registered

dominates

outstanding

the

segment

growth,
in

terms

the
of

subscriber base. The public sector companies enjoy a first-mover

advantage in this segment and this is likely to have helped them seize
a substantial share in the wireline market and maintain their
dominance in this segment. The public sector accounts for almost 87%
of the subscriber stand of the fixed line services (as on March 31,
2009); however, over the years, the share of private sector has
witnessed some enhancement.

Graph 3.4
Market share in Terms of subscriber Base (FY09) (%)

Wireless Services
Wireless services can be further divided into Global System for Mobile
Communications (GSM) and Code Division Multiple Access (CDMA).
The WLL (F) is operated under the CDMA know-how. The GSM
services, which account for 73% of the total subscriber base of the
wireless service, dominate the wireless segment.
Wireless Subscriber Market Share: Service Wise (GSM & CDMA)
The wireless services have witnessed important growth in the past few
years. India primarily follows the GSM mobile system, in the 900 MHz
and 1800 MHz band. The 900 MHz band has greater transmission
characteristics, so enabling lower capital expenditure for development
of coverage area as the number of towers and base stations required
are lesser as compared to the 1800 MHz band.

The wireless services segment of the telecom industry clocked an

annual average growth of around 63.79% during FY05- FY09. India
has overtaken the USA to become the second-major wireless network
in the world, and is second only to China, with the addition of about 8
million subscribers every month in the recent times. By end of FY09,
the wireless industry had touched the 391.76-mn-subscriber-mark.
This total subscriber base of FY09 comprise of 297.26 mn GSM
subscribers and 94.50 mn CDMA subscribers. During FY09, around
130.69 mn subscribers were added in the wireless segment of the
telecommunication industry.
Graph 3.5

Source : TRAI

Private sector players have played an important role in the fast growth of the
wireless segment. The private players account for around 86% of the total
wireless subscriber base. While public sector has been instrumental in the
development of the wireline service, the growth in wireless subscriber base for
these entities has been relatively slower compared to the private players.
Currently 12 wireless service providers (including 2 PSUs) exist and compete in
different regions. However, only 2 private players, Bharti and Reliance
Communications, have nationwide presence along with state-owned entities,
MTNL and BSNL, which together represent an additional pan-India presence.
Many players have been taking initiatives to expand operations across the country.
The GSM sector is dominated by players such as Airtel, Vodafone-Essar, and Idea

Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom.
Bharti Airtel is the largest GSM mobile operator in India and has a subscriber base
of 93.92 million followed by Vodafone-Essar, BSNL and Idea Cellular with a
subscriber base of 68.77 mn, 46.71 mn and 38.89 mn, respectively. Reliance
Communication is the largest CDMA mobile operator with a subscriber base of
52.65 mn followed by Tata Teleservices and BSNL that have a subscriber base of
35.12 million and 5.44 million, respectively. Only Reliance Communication and
Tata Teleservices offer both GSM and CDMA networks.
Graph 3.6

Market share in GSM segment FY09 (%)

Market share in CDMA segment FY09 (%)

Source : TRAI

Internet Services
Internet services in India have witnessed considerable growth in the
last few years owing to increased presence of the private players and
emergence of new technologies. A noteworthy improvement has also
been seen in the quality of internet services given the substantial
upgradation of telecom infrastructure. The subscriber base of internet
services reached 13.50 mn on March 31, 2009 as compared with 0.09
mn in 1997. During the last 5 years (FY05-FY09), the subscriber base
of internet services registered an average annual growth of 24.46%,

primarily driven by the rapid growth in subscriber base of the public

sector players.
Graph 3.7
Growth in Internet Subscriber Base

The public sector players dominate the internet market accounting for
almost 69.30% of the total internet subscriber base. Among the public
sector players, BSNL rules the internet provision market with a market
share of around 53.61% followed by MTNL that accounted for 15.69%
as at end March 31, 2009. Among the private players, Bharti Airtel Ltd
has the highest internet subscriber base of 1.08 mn followed by
Reliance Communications Infrastructure Ltd, which has a subscriber
stand of 0.93 mn.
In calculation to the internet subscribers, around 117.82 mn wireless
data subscribers also access the internet through wireless (GSM and
CDMA) networks; in fact, broadband connections also have witnessed
significant growth in the past few years. According to the Broadband
Policy 2004, the broadband connection is an always-on internet
access with a minimum speed of 256 Kbps from the Internet Service

Providers (ISP) Node to the customer premises equipment (CPE). The

broadband subscriber base has surged to around 6.20 mn by end
March 09 as against 0.18 mn at end March 05, registering a CAGR of
around 142% throughout this era.
Graph 3.8
Broadband subscriber

As at end March 2009, there were approximately 95 broadband service

providers. However, around 96.95% of the total broadband subscriber
base was accounted for by the top 10 players. In fact BSNL alone
accounts for almost 57.24% of the total broadband subscriber base.
Graph 3.9
Market share in broadband segment FY09 (%)

Internet telephony
Internet telephony is increasing at a steady velocity in India. According
to the accessible licensing policy, PC-to-PC internet telephony calls are
allowed without any restriction. A PC or adapter can be used to call
Public Switched Telephone Network (PSTN) / Public Land Mobile
Network (PLMN) abroad; however, Internet telephony calls from such
devices to PSTN/PLMN in India are not permitted. The Internet
telephony has been permitted to all ISPs with effect from August 24,
2007. A total of 34 ISPs provided Internet telephony services in India
(as on the quarter-ended March 31, 2009).
Graph 3.10
Share in subscriber base of PMRTS FY09 (%)

*Others include-Jet-Aiu Skyline Transport Pvt. Ltd., India Satcom Ltd.,

Container Movement (Bombay) Transport Pvt Ltd. Source: TRAI

Global Mobile Personal Communication by Satellite (GMPCS)

GMPCS services allow a subscriber to communicate from any point on
earth through a handheld fatal. Under these services, the telephone
numbers of users remain unchanged, irrespective of their location.
GMPCS services have been operational in India since 1999. As on date,
there is no license for providing GMPCS service in India.

Very Small Aperture Terminals (VSAT)

VSAT is a communication system in which the radio signals are
received and transmitted through a satellite. VSAT has a less than 3
meter tall dish antenna that relays data to the satellites in the
geosynchronous orbit, which then relays data from terminals on earth
to other terminals and hubs located in various parts of the world. It is
an economical and viable option to connect different geographical

locations. It provides connectivity to the points where regular systems

or wired lines fail to reach and last mile connectivity is difficult to
achieve.

VSATs

are

frequently

used

for

various

types

of

communications as well as to transfer broadband data such as VoIP,

satellite Internet and video or narrowband data such as polling,
SCADA (Supervisory Control and Data Acquisition), credit cards
transactions and RFID (Radio Frequency Identification). In India the
VSAT services market is growing rapidly. Now, 9 VSAT service
providers are offering VSAT services in India.
Mobile Value added Services (MVAS)
Over the last few years, Mobile VAS has gained significance as it has
been emerging as a potential substitute revenue stream. VAS enables
the subscriber to use the mobile phone for a host of purposes such as
for sending short messages, pictures, to surf the Internet, for mobile
banking including mobile payments, to read news headlines, astrology,
to listen to music, to play games and to seek various other types of
information. Stipulation of VAS is either directly done by the telecom
operators or by a third party VAS Provider (VASP). Services such as
SMS, GPRS are provided directly by the telecom operators and others
such as astrology, ring back tunes are provided by the VASPs. In most
cases, the contents used for providing VAS are sourced from content
providers/content developers or copyright owners known as content
owners. Bulk of VAS services currently being provided by the mobile
operators in India are in the form of SMS, ringtone and caller ring
back tones (CRBT).

3.7

CONTRIBUTION

OF

VARIOUS

TELECOMMUNICATION INDUSTRY IN ECONOMIC

DEVELOPMENT:
Telecommunication has been documented world-over as an important
tool for socio-economic development for a nation and plays a
phenomenal role in growth and modernization of various sectors of the
economy. Over the last few years, Indian telecom market has shown
overwhelming growth thanks to domestic demand, policy initiatives
undertaken by the government and marvelous efforts by the players of
the industry and in the process, has managed to emerge as one of the
youngest and fastest growing economies in the world today. Factors like
regulatory liberalization, structural reforms and competition played a
very significant part in this rapid transformation.
The fact that India is one of worlds fastest growing telecom markets in
the world, has acted as the primary driver for foreign and domestic
telecommunication companies investing into the sector. It is also
recognized as one of the most lucrative markets globally, consequential
in massive investments being made in the sector both by the private
and government sector in the last decade.
The telecom industry has witnessed significant growth in subscriber
base over the last decade, with growing network coverage and a
competition-induced decline in tariffs acting as catalysts for the
growth in subscriber base. The growth story and the potential have
also served to attract newer players in the industry, with the result
that the intensity of competition has reserved increasing.
Liberalization of the sector has not only led to fast growth but also
helped a huge deal towards maximization of consumer benefits,
evident from a huge fall in tariffs. Telecom sector has witnessed a
continuous rising trend in the total number of telephone subscribers.

From a meagre 22.8 million telephone subscribers (wireless plus wire

line) in 1999, it has grown to 926.53 million at the end of December,
2011, reaching teledensity of 76.86 %. The total number of urban
subscribers today stand at 611.19 Million (65.59 %) and rural
subscribers

at

315.33

Million

(34.41

%).

Wireless

telephone

connections have contributed to this growth as the number of wireless

connections rose from 35.61 million in 2004 to 893.84 Million at the
end of December, 2011.
Also, broadband division has seen significant growth with total
internet subscribers reaching 20.99 million in September, 2011, which
includes 13.30 broadband subscribers.
The industry has handled newer heights with the rollout of newer
circles by operators, successful auction of third-generation (3G) and
broadband wireless access (BWA) spectrum, network rollout in semirural areas and increased focus on the value added services (VAS)
market. Meanwhile, the introduction of Mobile Number Portability
(MNP) in India has made the Indian Telecom market more competitive,
in terms of service offerings and quality with lesser voice tariffs and
low ARPUs in India, emergence of new technologies and advancements
towards 3G amongst others reasons are motivating operators to shift
their focus on VAS. Particularly, past few years have been quite
revolutionary for the industry as it witnessed the emergence of
smartphones; GPS enabled sets, and 3G handsets. Initiatives to
connect the rural masses are already visible with service providers tie
ups with content providers for services related to agriculture, weather
and livelihood.
The appearance of the mobile has benefitted people across all walks of
life. Going forward, it is expected to play a significant role in bridging
the digital divide between the rich and poor, between near and far,
thus in connecting the nation. It has not only become the primary

communication medium for people, but is also finding numerous uses

across various domains. Today, it is being used for banking
transactions, making payments, acting as an educational and
multimedia tool, etc. However, the urgent need is to deliver services
that could enable efficient day- to- day life for the larger masses
efficiently. It can be an efficient mode of spreading governance, and
can also be used across verticals such as agriculture and healthcare.
The rapid rise of high-end mobile phones (smartphones) has enabled
the customers to access and utilize numerous software applications as
utility or for entertainment.
The fast pace of growth in telecommunications makes it necessary to
develop India as a Global manufacturing hub. With its proven track
record in the skill-intensive industries and the global trend to
manufacture and source products in low cost countries, India is well
placed to emerge as one of the leading hub for manufactured exports.
With the liberalization of the Indian economy, the telecom sector has
become very attractive for mergers and acquisitions. M&A in India is
subject to various laws the principle of them being The Companies Act
1956, Income Tax Act 1961 and the Takeover Code (for public listed
companies). Regulatory considerations are also evenly important to
take note of in telecom M&A.
Financial Assistance
The Indian Telecom industry contributes 3 % in the GDP (2010).
Foreign direct investment has been one of the major contributors in
the development of the Indian economy, and therefore, the need for
higher FDI is felt across sectors in the Indian financial system. The
telecom sector has played a crucial role in attracting FDI in India.
India's telecom sector received US$ 1093 million in foreign direct

investment (FDI) during the first quarter (April-November) of financial

year 2010-2011. Today, telecom is the third major sector attracting FDI
inflows after services and computer software sector. In the telecom
sector, FDI up to 49% is allowed under automatic route and beyond
that up to 74% is permitted through the Foreign Investment Promotion
Board (FIPB), a government body. As per the current telecom services
policy, the sector has 74% of equity on basic cellular, unified access
services and other value-added services.
An attractive trade and investment policy and profitable incentives for
foreign collaborations have made India one of the worlds most
attractive markets for the telecom equipment suppliers and service
providers. Few such constructive policies are:

No industrial license is required for setting up manufacturing

units for telecom equipment.

100% Foreign Direct Investment (FDI) is allowed through

automatic route for manufacturing of telecom equipments.

Payments for royalty, lump sum fee for transfer of technology

and payments for use of trademark/brand name on the
automatic route.

Foreign equity of 74% (49 % under automatic route) is permitted

for telecom services - basic, cellular mobile, paging, value added
services,

NLD,

ILD,

ISPs

and

global

mobile

personal

communications by satellite.

Full reparability of dividend income and capital invested in the

telecom sector

Research & Development

India has established its dominance as a technology solution provider.

Efforts are being continuously made to develop affordable technology
for masses, as also comprehensive security infrastructure for telecom
network. Research is on for the preparation of tested infrastructure for
enabling interoperability in Next Generation Network. Pilot projects on
the existing and emerging technologies have been undertaken
including WiMax, 3G etc. Emphasis is being given to technologies
having potential to improve rural connectivity. Also to beef up R&D
infrastructure in the telecom sector and bridge the digital divide,
cellular operators, top academic institutes and the Government of
India together set up the Telecom Centres of Excellence (COEs)
Seven Centres of Excellences in various field of Telecom have been set
up with the support of Government and the participation of
private/public telecom operators as sponsors, at the selected academic
institutions of India.
The proposed benefits from the R&D initiatives by the Government are:

Pre-eminence of India as a technology solution provider.

Comprehensive security infrastructure for telecom network.

Tested infrastructure for enabling interoperability in Next

Generation Network.

To support Research & development in the country and promoting

Start ups focused on technology and modernization, a weighted
deduction of 150% of expenditure incurred on in-house R&D is
introduced under the Income Tax Ac. In addition to the existing
scheme for funding various R&D projects have been funded through
new scheme like Support International Patent Protection in Electronics
& IT (SIP-EIT), Multiplier Grants Scheme (MGS).

The government has initiated the setting up of an Open Technology

Center through NIC aimed at giving successful direction to the country
on Open Technology in the areas of Open Source Solutions, (OSS),
Open Standard, Open Processes, Open Hardware specifications and
Open Course-ware. This initiative will act as a National Knowledge
facility

providing

synergy

to

the

overall

components

of

Open

Technology globally.
REGULATIONS :
1. The Indian Telegraph Act, 1885
This Act is one of the oldest legislations still in consequence in India
and is an Act to amend the law relating to telegraphs10 in India.
2. The Indian Wireless Telegraphy Act, 1933
This Act was passed to regulate the possession of wireless telegraphy
apparatus11. According to this Act, the possession of wireless
telegraphy apparatus by any person can only be allowed in accordance
with a license issued by the telecom authority. Further, the Act also
levies penalties if any wireless telegraphy apparatus is held without a
valid license.
3. The Telecom Regulatory Authority of India Act, 1997
The Telecom Regulatory Authority of India Act, 1997 allowed the
establishment of the TRAI. The role and functions of the TRAI have
already been discussed in Chapter III above. Interestingly, the 1997 Act
empowered the TRAI with quasi-judicial authority to adjudicate upon
and settle telecom disputes. Later this Act was amended by the
Telecom Regulatory Authority of India (Amendment) Act, 2000 to bring
in

better

clarity

and

distinction

recommendatory functions of TRAI.

between

the

regulatory

and

4. The Information Technology Act, 2000

In 2000, the Indian Parliament approved the Information Technology
Act, 2000 (ITA) mainly to promote e-commerce and give legal
recognition to electronic documents and digital signatures as means to
authenticate electronic documents. Later, the Information Technology
(Amendment) Act, 2008 (ITAA 2008) was passed which provided
additional focus on information security as well as added several new
sections on offences including cyber terrorism and data protection.
5. Communication Convergence Bill
In the year 2000, the Government of India introduced a projected
Communication Convergence Bill (the Convergence Bill). As its
name indicates, the objective of the Convergence Bill is to establish a
new converged regulatory framework to promote and develop the
communications sector (including broadcasting, telecommunications
and multimedia) in an environment of increasing convergence of
technologies, services and service providers.
6. National Telecom Policies:
Driven by various policy proposal from NTP94 and NTP99, the Indian
telecom sector witnessed a complete transformation in the last decade.
But, since then there has been a rapid advancement of technology, and
many changes have arisen in the telecom scenario in the world, thus,
creating a need for reviewing the current telecom policy. National
Telecom Policy 2012 is expected to ensure that Indias growth doesnt
slow down and it plays a leadership role effectively.
Challenges:

Even though the Indian telecommunications sector has come a long

way since the time of liberalization and promises growth, there are a
number of issues which still create a challenge to its progress. Two
critical issues are:
(i) Declining Average Revenue per User (ARPU): The Indian
telecommunications sector is a highly competitive sector. A sustained
price war in the industry has resulted in declining ARPUs. As a result,
operators are focusing more on data and value added services to meet
the revenue deficit caused by fall in revenue by their core business.
(ii) Lack of Telecom Infrastructure: Operators have to incur huge
capital costs to provide telecommunications services in the rural areas
of India. Added to this cost is the logistical challenge posed by the lack
of supporting infrastructure such as lack of roads and electricity.
With new players coming in, the intensity of competition in the
industry has increased, especially over the last four years. The market
share of the telecom companies reflects the fragmented nature of the
industry, with as many as 15 players.
Future prospects:
Seeing that the fastest growing telecommunications market in the
world, India is projected to have 1 billion telephones by 2015 and is
estimated

to

become

world's

largest

mobile

phone

market

by

subscriptions by 2013. With a large population yet to have access to

telecommunication and teledensity still being 76.86 % and rural teledensity at 37.48 %, there is significant growth opportunity for the
sector, especially in rural areas and 3G and BWA yet to make major
inroads.

India offers an unparalleled opportunity for telecom service operators,

infrastructure

vendors,

manufacturers

and

associated

services

companies. A host of factors are contributing to enlarged opportunities

for growth and investment in telecom sector:

An expanding Indian economy with increased focus on the

services sector

Population mix moving favorably towards a younger age profile

Urbanization with increasing incomes

Investors can look to capture the gains of the Indian telecom boom and
diversify their operations outside developed economies that are marked
by saturated telecom markets and lower GDP growth rates.
An attractive trade and investment policy and worthwhile incentives for
foreign collaborations have made India one of the worlds most
attractive markets for the telecom equipment suppliers and service
providers.
Key factors, which will fuel the growth of the sector include increased
access to services owing to launch of newer telecom technologies like
3G and BWA, better devices, changing consumer behaviour and the
emergence of cloud technologies. Majority of the investments will go
into the capital expenditure for setting up newer networks like 3G and
developing the backhaul. Moreover, the introduction of Mobile Number
Portability (MNP) in India has made the Indian Telecom market more
competitive, in terms of service offerings and quality.
ROLE

OF

COMPONENTS

IN

TELLECOMMUNICATION

IN

INDUSTRIES:
The telecommunications sector was selected by the Trade Committee
as one of the sectors, along with business services and creation, to be

covered in pilot studies aimed at examining the effects of regulations

on trade flows. Telecommunications is distinct among services owing to
its crucial role in driving economic growth and its rapidly changing
technological and regulatory environment. This sector is also unique in
that demand for this service is derivative demand and that most of the
trade in this sector is not recorded. Therefore, trade-related data
analysis and conclusions are generally confined to the small segment
consisting of fixed-line calls, for which reasonably good data are
available. The telecommunications industry is a regulated industry
owing to its network characteristics. Different regulations may have
different impacts on trade flows and an aim of this report is to identify
the ones that may affect trade. Such regulations will be examined from
the point of view of their impact on trade; however, they can in
principle be put in the GATS context at a later stage. The economics of
telecommunications regulation is a science on its own. Here only those
regulations will be mentioned that either directly relate to international
trade, investment or foreign affiliates or are perceived to have a bearing
on trade flows.
Selected features of the telecommunications sector
Telecommunications services is a broad sector surrounding the
transmission of sound, images, or other information by such channels
as telephone, telex, telegram, cable, broadcasting, satellite, electronic
mail, or duplicate services and including business network services,
teleconferencing, and support services.1 The definition of the category
may differ somewhat by country; in the United States, for instance,
internet providers do not belong to telecommunications but rather to
information services.
The importance of the telecommunications sector for the market is not
only reflected in its sheer size of about 3% of GDP in 2005, but even

more by its involvement to overall productivity growth, hence to the

growth

of

the

economy.

Given

the

telecommunication

sectors

prominent role as a driver of economic growth, it is crucial to create an

economic policy environment that stimulates productivity growth in
this sector.
Telecommunications services as critical inputs to production and
delivery of goods and other services
The

telecommunications

sector

is

described

by

continuous

technological innovation spurring productivity growth in the sector.

Given the sectors critical role in producing inputs to the production
and delivery of goods and other services, innovation and productivity
growth in telecommunications are decisive for the whole economy.
Total factor productivity (TFP) estimates using firm-level data in the
Amadeus database show that the telecommunications sector has been
the fastest growing in Spain (Figure 1). Correa (2006) shows that the
telecommunications

sector

registered

above-average

productivity

growth over the past 34 years in the UK and confirms that other
industries have greatly benefited from rapid productivity growth in this
sector. This may have emanated from the policy of encouraging
infrastructure investment in their production processes.

Graph 3.11

Figure 13. Telecommunications leads productivity growth in services in

India Average annual compound growth rate of TFP,
Note: Total factor productivity was estimated using firm-level data from the
Amadeus database. Source: Authors estimation. 0.00% 0.05% 0.10% 0.15% 0.20%
0.25% 0.30% 0.35% 0.40% 0.45%

The contribution of telecommunications to the growth performance of Indias

economy
Communications is the fastest growing sector within Indias financial
system. The average composite rate of growth of the sector works out to
24.02 per cent per annum since the turn of this millennium (See Table
2). No other sector of the economy has clocked such a high rate of
growth. The sector accounts for about 4 per cent of GDP and therefore
with this rather high rate of growth contributes about 11 per cent of
the growth in overall GDP of the country. Of the Information and
Communications Technology (ICT) sector of the economy, it is again the
communications sector that is more important. This is evident from a
dataset on ICT spending developed by World Information Technology
and Services Alliance (2006), of the total spending on ICT by India,
about 63 per cent was in communications (See Graph 3.12).
Graph 3.12
Distribution of total ICT spending in India, 2001-2006

NOTE: World Information Technology and Services Alliance (WITSA) (2006)

Table 3.1: Relative share of the service sector in Indias economy,

1990-91 and 2006-07 (per cent)
Table 3.1
Real GDP

Exports

FDI

1990-91

40.6

20

Not Available

2006-07

61.8

39

81

Source: Computed from Reserve Bank of India (RBI) (2007)

Table 3.2: Contribution of the communication sector to Indias growth

performance 1999-2000 to 2005-06 (1997-2003)
Share

Growth rate of

Overall

Contribution

communication

rate of

(%)

sector

growth of
GDP

1999-2000

1.6

2000-2001

1.9

26.9

41

12.47

2001-2002

2.2

19.5

56

7.66

2002-2003

2.6

25.6

34

19.58

2003-2004

3.1

25.4

86

9.16

2004-2005

3.5

22.8

75

10.64

2005-2006

23.9

91

10.51

Source: Central Statistical Organization (2007)

Graph 3.13

Graph 3.13: Relative shares of the equipment and service sectors in the total
telecom equipment sector, 1992-93 to 2005-2006
Source: Department of Telecommunications (DoT) (2007) and World Markets
Research Centre (2005)

Table 3.3: Trends in the number of telecom subscribers and in tele

density, 1991-2007 (Numbers in millions; Tele density is number of
telephones per 100 people)
Column
s

Fixed G. Rate Mobile G. Rate

Total

G.
Rate

5.07

Tele
Density

Ratio of
mobile
to Fixed

1991

5.07

1992

5.81

14.60

5.81

14.60 0.67

1993

6.8

17.04

6.8

17.04 0.77

1994

8.03

18.09

8.03

18.09 0.89

1995

9.8

22.04

9.8

22.04 1.07

1996

11.98

22.24

11.98

22.24 1.26

1997

14.58

21.37

0.34

14.88

24.21 1.56

0.02

1998

17.8

22.42

0.88

158.82 18.68

25.54 1.94

0.05

1999

21.59

21.29

1.2

36.36

22.79

22.00 2.33

0.06

2000

26.51

22.79

1.88

56.67

28.39

24.57 2.86

0.07

2001

32.44

22.37

3.58

90.43

36.02

26.88 3.58

0.11

2002

41.84

27.87

13

263.13 54.48

51.25 4.3

0.31

2003

42.58

2.65

33.58

158.31 76.16

39.79 5.1

0.79

2004

45

5.68

50

48.90

95

24.74 7.04

1.11

2005

49

8.89

76

52.00

125

31.58 10.66

1.55

2006

40.43

-17.49

149.5

96.71

198.93 51.94 17.16

3.70

2007

39.25

-2.92

233.63

56.27

272.28

25

5.28

2008 *

38.92

325.78

28.33

7.14

277.92

0.6

*as on June 30 2008

Source: Department of Telecommunications (DoT) (2005) and Telecommunications
Regulatory Authority of India (TRAI) (various issues)

Table 3.4: Monthly additions to mobile subscribers, 2002-08 (in

million numbers)
Column
January

2002 2003 2004 2005 2006 2007

0.64

1.58

1.76

4.69

6.81

2008
8.77

February

0.6

1.6

1.67

4.27

6.22

8.53

March

0.96

1.93

0.78

5.03

3.53

10.1

April

0.28

0.64

1.37

1.46

3.88

6.11

8.21

May

0.29

2.26

1.33

1.72

4.25

6.57

8.62

June

0.35

1.42

1.43

1.97

4.78

7.34

8.81

July

0.36

2.32

1.74

2.46

5.39

8.06

August

0.49

1.79

1.67

2.74

5.9

8.31

September 0.37

1.61

1.84

2.48

6.07

7.8

October

1.67

4.51

2.9

6.71

8.05

November 0.72

1.9

1.56

3.51

6.8

8.32

December 0.8

1.69

1.95

4.46

6.4

8.17

Average

1.46

1.63

2.33

5.35

7.1075

0.53

0.46

Source: Telecom Regulatory Authority of India (TRAI) (various issues)

Interpretation:
Contribute to the private sector in the on the whole telecoms industry
has been rising (Figure 3) and the ratio of private to public essentially
crossed unity in 2006. This again is due to the fact that the public
sector is more leading in wireline (or fixed) and the private sector is
dominant in the wireless (mobile) segment (Graph 3.14)

Graph 3.14

Graph 3.14: Rising privatisation of the telecommunications services sector, 19952006

Source: Department of Telecommunication (DoT) (2007)

Table 3.5: Structure of the telecommunications services industry

according to ownership (Percentage shares as on May 31 2007)
Wireline

Wireless

Public

91

19.32

Private

80.68

Total

100

100

Source: Telecom Regulatory Authority of India (TRAI) (2007 a)

FUTURE

GROWTH

OPPORTUNITIES

OF

INDIAN

TELECOM

SECTOR:
As per TRAI, two other related aspects for market growth are
availability of spectrum and availability of resources for network rollout
and development. The government is currently looking into these two
areas. The 79% hike in FDI has been cleared by the government to
ensure continuous flow of investments to expand the reach of the
mobile operators. To realize full market potential and achieve the
forecasts, telecom operators have to work on a segmented approach
and focus on the five key strategies given below:

Mobile in the hand of every urban youth (age group 15 to 24

years).

Mobile in the hand of every executive /businessman/skilled

worker.

Mobile in every household with income above Rs. 4000.

Mobile penetration in every town/village, with a population of

over 3,000.

Mobile Phones affordable and available wherever mobile services

available.

CHAPTER-4
MARKETING STRATEGIES OF
DIFFERENT TELECOM
COMPANIES
4. 1 Introduction :
An interesting feature of every industry in the current scenario is high
volatile competitive environment. The market for mobile service
segment are much more then the fixed line service. Private operators
hold 88.43% of the wireless market share (based on subscriber base)
where as BSNL and MTNL, the two PSU operators hold only 11.57%
market share. The graphical presentations of market shares and
shares in net additions of all the service providers during the month of
September, 2012 are given below:
Graph 4.1
Service Provider wise Market Share as on 30th September, 2012.

Graph 4.2
Service Provider wise growth in subscriber base
(August-September 2012).

Graph 4.3
Overall Teledensity (Circle Wise)

4.2 Overall Teledensity (Circle Wise)

1. Population data/Projections are available state wise only.

2. Teledensity figures are derived from the subscriber data provided by
the operators and the population projections published by the Office of
the Registrar General & Census Commissioner, India.
3. Delhi Service area, apart from the State of Delhi, includes wireless
subscribers of the areas served by the local exchanges of Ghaziabad &
Noida (in UP) and Gurgaon & Faridabad (in Haryana). West Bengal
service area includes Kolkata, Maharashtra includes Mumbai and
Tamil Nadu includes Chennai
Table 4.1
Market share of Various Telecom Service Provider

Mobile phone companies Bharti Airtel and Idea Cellular have increased
their market share in terms of revenue in the three months to
December, a sign that their strategy of focusing on data and cutting
discounts has begun to pay off.
In contrast, RCOM and Aircel, which had been gaining market share
since the first quarter, have lost pace, according to data provided by
the Telecom Regulatory Authority of India (Trai). Telenor's Indian unit,

Uninor, also lost market share (revenue) as it closed operations in a few

circles.
"Incumbents' strategy of improving revenue market share seems to be
paying off as they focus on revenue from data and weeding out
subscribers that do not bring revenue," said an analyst from a
Mumbai-based consulting firm. "Operators have started to focus on
profitability, which can be clearly seen in case of new operators who
have shut operations in some circles to make business viable."
Telecom operators have also increased tariffs and cut down on freebies
and discounts to increase profitability. Bharti, the country's top mobile
phone operator, recorded its largest increase in revenue share since
the beginning of this financial year, accounting for 30.4% share of the
industry's sales for the December quarter, up from 29.9% in the
previous quarter. Brokerage houses and analysts said Bharti's revenue
market share had to be adjusted for the one-time gain in revenues in
the second quarter from an outstanding dispute in TDSAT related to
inter-connect charges, due to which the revenues were slightly inflated.
Therefore, the company's actual revenue market share in the
September quarter had declined by 28 basis points from 30.1% in the
quarter ended June, and its share in the December quarter improved
on an organic basis. Following telecom tribunal TDSAT's favorable
order, Bharti recognised revenues of Rs 586 crore in the September
quarter. Bharti's regional markets showed massive improvement as
revenue share in Tamil Nadu, Rajasthan, UP East and Bihar rose by
more than 1.5% on average. While Karnataka grew by 0.7%, Andhra
Pradesh

saw

loss

of

1.1%

revenue

share

in

the

third

quarter, IIFL Research said.

Idea Cellular, too, gained more than 20 basis points in three months to
December, strengthening its revenue market share to 14.8% after two

quarters of slide. The company regained lost ground in Maharashtra,

where it is the market leader, with a 65 basis points rise in revenue
share while in Kerala and Madhya Pradesh its share grew by 97 and
96 basis points, respectively.
For Vodafone, the country's second-largest mobile phone company by
subscribers, revenue market share remained stable for the third
straight quarter at 22.5%.
A company spokesperson, however, said its share had grown to 21.3%
on the back of growth in voice from new circles of Assam, the
Northeast, Bihar, Himachal Pradesh, J&K, Madhya Pradesh and
Chhattisgarh, which were acquired in 2008-09, besides rise in overall
data revenues.
"More than 33.1 million mobile internet users contribute roughly 6.2%
of the total revenues as of Q3. The number of internet users has
doubled over the last two to three years, while the overall quality of
customers has improved, which is evident in our VLR numbers," he
said.
The revenue market share of Anil Ambani-promoted RCOM, the third
largest operator, dipped to 7.9% in the December quarter, down from
8.1% in the second quarter when the growth had been more than 40
basis points.
Madhya Pradesh telecom circle includes Madhya

Pradesh and

Chhattisgarh states higher proportion of active users coupled with

healthy growth. The below stated are the key features representing the
status of the telecom market in Madhya Pradesh:

Mobile subscriber base of Madhya Pradesh (M.P.) increased by

12.65% during FY2012 to reach 52.62 million

Active wireless subscriber base in M.P. is 81.48% resulting in

42.06 million active mobile users. M.P. has one of most active
mobile users by proportion in India

Active subscriber base in M.P. increased by 23.30% during

FY2012 compared with national average of 19.00%

By March 2012, M.P. is 6th largest wireless telecom market in

India accounting for 6.16% of total active subscriber base,
climbed up from 8th position during FY2011

By March 2012, M.P. registered 2,501,550 Mobile Number

Portability (MNP) requests, resulting into churn rate of 4.85%

In M.P. wireless telecom market, Idea leads with 26.6% share in

terms of total subscriber base followed by Reliance (23.7%),
Bharti (18.7%), Tata (9.4%) and BSNL (9.3%)

Idea extends market share in terms of active subscriber base as

101.5% of its mobile subscribers are active compared with
74.6% for Reliance and 91.6% for Bharti

In terms of active subscriber base, Idea has 33.2% market share

followed by Reliance (21.7%) and Airtel (21.1%

Bharti Airtel maintains its leadership position with 24.9% market

share in India.Idea has largest proportion of active mobile users at
97.19% followed by Vodafone (95.71%) and Bharti Airtel (95.26%)
State-owned BSNL+MTNL with only 56.08% of active mobile
subscriber base is certainly struggling in highly competitive and
dynamic market environment raising lot of concerns about their
future While Tata (68.14%), Aircel (64.14%) and Unitech (70.22%)
are way behind leading pack in terms of active user proportion
raising doubts about long term sustainability of their business
model During September 2013, Reliance took drastic step by

disconnecting 10.49 million of its inactive connections. As a result,

active subscriber percentage of Reliance improved from 86.68% in
August 2013 to 93.71% in September 2013 Due to its large scale
disconnections, Reliance dropped to 4th position behind Airtel,
Vodafone and Idea in terms of total wireless subscriber base Idea
(1.21 million), Vodafone (1.20 million) and Bharti (1.16 million) led
in terms of net subscriber additions during September 2013 while
Reliance (-10.49 million) and MTNL (-0.23 million) were worst
performers
Table 4.2
Shows the share of various telecom service providers and their
overall rank for the period of the month September 2013

Source: TRAI Website

Table 4.2 shows the share of various telecom service providers and
their overall rank for the period of the month September 2013.As the
data depicts the market share of the Bharti group is at maximum level.
Table 4.3
Share of various telecom service providers state wise and their
overall rank for the period of September 2013

Source: TRAI Website

Table 4.3 shows the level of subscriber base as per the circle wise for
the month of September 2013 for the various states across India.As
per the state it is being observed in the table that Maharashtra and
Goa is at the top rank in terms of subscriber base.
Table 4.4
SUBSCRIBER BASE OF WIRELESS (GSM AND CDMA) SERVICES
FROM 2004-05 TO 2009-10
(SUBSCRIBER BASE IN MILLIONS)

Source: Service Provider

Data includes WLL (F) subscribers.44 Annual Report 2009-10

4.3 Conclusion:
While understanding and analyzing the Interview of Indian Telecom
Industry by scenario in Indian perspective, phenomenal growth has
been observed. Since globalization, privatization in telecom sector
brought tremendous volatility in the fixed and mobile telephone
segment. Growth of Individual companies and overall sector has given
a support to the growth Indian colony as a whole

CHAPTER-5
MARKETING STRATEGY
OF BSNL
5.1 HISTORY OF BSNL TELECOM:
The foundation of Telecom Network in India was laid by the British
sometime in 19th century. The history of BSNL is linked with the
beginning of Telecom in India. In 19th century and for almost entire
20th century, the Telecom in India was operated as a Government of
India wing. Earlier it was part of erstwhile Post & Telegraph
Department (P&T). In 1975 the Department of Telecom (DoT) was
separated from P&T. DoT was responsible for running of Telecom
services in entire country until 1985 when Mahanagar Telephone
Nigam Limited (MTNL) was carved out of DoT to run the telecom
services of Delhi and Mumbai. It is a well known fact that BSNL was
carved out of Department of Telecom to provide level playing field to
private telecoms. Subsequently in 1990s the telecom sector was
opened up by the Government for Private investment, therefore it
became necessary to separate the Governments policy wing from
Operations wing. The Government of India corporatized the operations
wing of DoT on October 01, 2000 and named it as Bharat Sanchar
Nigam Limited (BSNL).BSNL operates as a public sector.
BSNL, then known as the Department of Telecommunications, had
been a near monopoly during the socialist period of the Indian
economy. During this period, BSNL was the only telecom service
provider in the country. MTNL was present only in Mumbai and New
Delhi. During this period BSNL operated as a typical state-run
organization, inefficient, slow, bureaucratic, and heavily unionised. As
a result subscribers had to wait for as long as five years to get a

telephone connection. The corporation tasted competition for the first

time after the liberalisation of Indian economy in 1991. Faced with stiff
competition from the private telecom service providers, BSNL has
subsequently tried to increase efficiencies itself. DoT veterans,
however, put the onus for the sorry state of affairs on the Government
policies, where in all state-owned service providers were required to
function as mediums for achieving egalitarian growth across all
segments of the society. The corporation (then DoT), however, failed to
achieve this and India languished among the most poorly connected
countries

in

the

world.

BSNL

was

born

in

2000

after

the

corporatisation of DoT. The corporatisation of BSNL was undertaken

by

an

external

international

consulting

team

consisting

of

consortium of A.F.Ferguson & Co, JB Dadachanji and NM Rothschild and was probably the most complex corporatisation exercise of its kind
ever attempted anywhere because of the quantum of assets (said to be
worth USD 50 Billion in terms of breakup value) and over half a
million directly and indirectly employed staff. Satish Mehta, who led
the team later confessed that one big mistake made by the consortium
was to recommend the continuation of the state and circle based
geographical units which may have killed the synergies across regions
and may have actually made the organisation less efficient than had it
been a seamless national organisation. Vinod Vaish, then Chairman of
the Telecom Commission made a very bold decision to promote
younger talent from within the organisation to take up a leadership
role and promoted the older leaders to a role in licensing rather than
in managing the operations of BSNL. The efficiency of the company
has since improved, however, the performance level is nowhere near
the private players.
The corporation remains heavily unionized and is comparatively slow
in decision making and its implementation, which largely acts at the
instances of unions without bothering about outcome. Management
has been reactive to the schemes of private telecom players. Though it
offers services at lowest tariffs, the private players continue to notch
up better numbers in all areas, years after year. BSNL has been
providing connections in both urban and rural areas. Pre-activated
Mobile connections are available at many places across India. BSNL

has also unveiled cost-effective broadband internet access plans

(DataOne) targeted at homes and small businesses. At present BSNL
enjoy's around 60% of market share of ISP services.
2007 was declared as "Year of Broadband" in India and BSNL
announced plans for providing 5 million broadband connectivity by the
end of 2007. BSNL upgraded Dataone connections for a speed of up to
2 Mbit/s without any extra cost. This 2 Mbit/s broadband service was
provided by BSNL at a cost of just US$ 11.7 per month (as of 21 July
2008 and at a limit of 2.5GB monthly limit with 0200-0800 hrs as no
charge period). Further, BSNL is rolling out new broadband services
such as triple play BSNL planned to increase its customer base to 108
million

customers

by

2010.

With

the

frantic

activity

in

the

communication sector in India, the target appears achievable.

BSNL is a pioneer of rural telephony in India. BSNL has recently
bagged 80% of US$ 580 m (INR 25 billion) Rural Telephony project of
Government of India.
On 20 March 2009 BSNL advertised the launch of BlackBerry services
across its Telecom circles in India. The corporation has also launched
3G services in select cities across the country. Presently, BSNL and
MTNL are the only players to provide 3G services, as the Government
of India has completed auction of 3G services for private players. BSNL
shall get 3G bandwidth at lowest bidder prices of Rs 185 billion, which
includes Rs 101.86 billion for 3G and Rs 83.13 billion for BWA.
As of December 2011, many other private operators have started
rolling out their 3rd Generation (aka 3G) services alongside and are
enjoying some success in their campaigns to get market share. While
BSNL still maintains its connectivity standard and expands to many
more areas including rural areas with their 3G services. Also the
network infrastructure has been upgraded from to provide 3.6 Mbit/s
to 7.2 MBits/sec. It is enjoying a slow but somewhat steady success in
gaining market share in this regard.
The introduction of MNP(Mobile Number Portability) which is an
service that lets the consumer change wireless service providers while
retaining their actual mobile number, BSNL has seen many customers

opting for this service to move away from the services to other
operators. Despite this as the Indian Wireless market grows BSNL still
has a loyal base of subscribers and many more subscribers being
added to it every day. This provides customer services for 95 million as
of June 2011.
BSNL announced the discontinuation of its telegram services from 15
July 2013, after 160 years in service. It was opened to the public in
February 1855; in 2010 it was upgraded to a web-based messaging
system in 2010, through 182 telegraph offices across India.

5.2 ORGANISATION STRUCTURE:

Corporate structure of BSNL Board consists of CMD & Five full time
Directors Human Resource Development (HRD), Planning & New
Services, Productions & Operations, Finance and Commercial &
Marketing, who manages the entire gamut of BSNL operations. There
are five other Directors in the full Board of BSNL. CMD (Chairman &
Managing Director) Shri Rakesh Kumar Upadhyay
Director Consumer Fixed Access (CFA) Shri.N.K.Gupta Director
(Finance) Shri KCGK Pillai Director (HRD) & (Enterprise)A.N.Rai Government Director Shri Shahbaz Ali.

ORGANISATIONAL CHART

Shri

Source : http://bsnl.co.in/infomanual.pdf

Chart 5.1
DEPARTMENT ORGANISATION STRUCTURE:

Source : http ://cca.ap.nic.in/telecom.pdf

Chart 5.2
BSNL doesnt follow line & staff structure; it follows only simple line
structure the orders are given by the hierarchy & superiors & it should
be followed by the subordinates.

5.3 FUNCTIONS AND ACTIVITIES OF BSNL :

Important functions of T&D Circle can widely be classified as follows:
1)

Acceptance and Testing(A/T) of Switching Systems more than 2K

capacity.

2)

Acceptance and Testing(A/T) of Transmission Systems more

than 8 mbps capacity.

3)

Issue of Engineering Instructions

4)

Power & Telecom Co-ordination Committee

5)

Publishing TELECOMMUNICATIONS journal.

6)

Investigation of fire cases.

7)

Sample

check

of

installations

done

&

Acceptance

and

Testing(A/Ted) by Territorial Telecom Circles.

8)

Providing

Webbased

Acceptance

Testing

Offer

Managment

System(ATOMS) for Territorial Circles and Corporate Offices.

This circle has

been playing an important

role

in the

introduction of new Telecom systems and technologies by

participating

in

validation

of

equipments/

systems

and

participation in various working groups for preparation of

technical specifications

A/T OF SWITCHING SYSTEMS:

Acceptance testing is carried out for all types of Electronic Exchanges
like E10B, C--DOT MAX, EWSD, NEAX--61E, AXE--10, OCB- 283,
FETEX-150 NIB, ISDN, WLL, IMPCS etc.

A/T OF TRANSMISSION SYSTEMS

Long distance Transmission systems which form the back-bone of
National Trunk Network consisting of Microwave, Satellite, Optical
>Fibre Cable are also subjected to rigorous Acceptance testing to
ensure reliable and trouble free NSD & ISD facilities and Data
transmission. All the transmission systems installed by Telecom
Projects at Mumbai,Chennai,>Kolkata and New Delhi and also by Task
Force at >Guahati are A/Ted by this unit.

ISSUE OF ENGINEERING INSTRUCTIONS:

T & D Circle issues Engineering instructions on different topics for use
by the field units of the Department. In the current year 2003-04, 14
new >EIs were finalized covering latest switching and transmission
systems for the benefit and use of the field staff of theDepartment.

POWER & TELECOM CO-ORDINATION COMMITTEE:

In order to ensure safety of Telecom assets & personnel and
interference free working of Telecom >systems, Telecom Co-ordination
Committee (PTCC) has been set-up in the year 1949. The main
function of PTCC is to examine all new cases of power and telecom
lines and cables and recommend protection measures in order to
ensure safe and satisfactory working of Telecom systems. Major coordination problems in the field are settled in PTCC meeting being held
regularly at Central, State and Divisional state levels. At central level,
policy matters are decided and guidelines issued so also the unsettled
cases at state level are discussed and settled.
During the year 2003-04 , 261 Power and 54 Telecom Central PTCC
cases involving about 6930.38 and 643.527 respectivley route kms and
113 Power State level cases were approved by PTCC.

PUBLISHING TELECOMMUNICATIONS JOURNAL:

T

&

Circle

is

publishing

technical

journal

titled

TELECOMMUNICATIONS since 1951. The journal is being published

on a bimonthly basis. The Journal has entered into 54th year of
publication. The circulation of the journal is around 7000 copies and
quite popular in the telecom sector.

INVESTIGATION OF FIRE CASES:

T & D Circle is playing important role in investigation of fire incidences
in Telecom installations.

5.4 PRODUCTS OF BSNL :

When it comes to connecting the four corners of the nation, and much
beyond, one solitary name lies embedded at the pinnacle - BSNL. A
company that has gone past the number games and the quest to attain

the position of a leader . It is working round the clock to take India

into the future by providing world class telecom services for people of
India. BSNL is India's no. 1 Telecom Service provider and most trusted
Telecom brand of the Nation. Driven by the very best of telecom
technology from chosen global leaders, it connects each inch of the
nation to the infinite corners of the globe, to enable you to step into
tomorrow.
1.

Data One

2.

Sancharnet

3.

ISDN

4.

Web Hosting

5.

MPLS-VPN

6.

Leased Line

7.

Wi-Fi

8.

Web Colocation

DETAILS OF BSNL PRODUCTS :

Bharat Shanchar Nigam Ltd. is in the process of commissioning of a
world class, (multi-gigabit,) multi-protocol, convergent IP infrastructure
through National Internet Backbone-II (NIB-II), that will provide
convergent services through the same backbone and broadband access
network. The Broadband service will be available on DSL technology
(on the same copper cable that is used for connecting telephone), on a
countrywide basis spanning 198 cities.
In terms of infrastructure for broadband services NIB-II would put
India at par with more advanced nations. The services that would be

supported includes always-on broadband access to the Internet for

residential and business customers, Content based services, Video
multicasting, Video-on-demand and Interactive gaming, Audio and
Video conferencing, IP Telephony, Distance learning, Messaging: plain
and feature rich, Multi-site MPLS VPNs with Quality of Service (QoS)
guarantees. The subscriber will be able to access the above services
through Subscriber Service Selection System (SSSS) portal.
Keeping pace with the technological trend to provide latest and varied
value

added

services

to

its

customers,

BSNL

harnesses

IP

Infrastructure based on MPLS Technology to offer world class IP VPN

services. MPLS is an acronym for "Multi Protocol Label Switching".
MPLS VPN is a technology that allows a Service Provider like BSNL to
have complete control over parameters that are critical to offering its
customers service guarantees with regard to bandwidth throughputs,
latencies and availability. The technology enables secure Virtual
Private Networks (VPN) to be built and allows scalability that will make
it possible for BSNL to offer assured growth to its customers without
having to make significant investments. BSNL would now be geared to
provide Bandwidth on demand, Video Conferencing, Voice Over IP
(VOIP) and a host of other value added services that could
revolutionize the way a corporate business works!. MPLS based VPNs
reduce customer networking complexity, costs and totally do away with
the requirement of in-house technical work force. Rather than setting
up and managing individual point-to-point circuits between each office
using pair of Leased Lines, MPLS VPN customers need to provide only
one connection from their office router to a service provider edge
router.
BSNL has tied up with various Networking solution providers to
provide end-to-end solution to its valued customers, including

Customer End (CE) routers and other networking components.

Sancharnet is a country wide Internet Access Network of Bharat
Sanchar Nigam Limited, India. It offers Dedicated and Dialup (PSTN &
ISDN) Internet Access Services across all the major cities in India

5.5 MAIN SERVICES BEING PROVIDED BY BSNL :

BSNL provides almost every telecom service, however following are the
main Telecom Services being provided by BSNL in India:1. Universal Telecom Sevices : Fixed wireline services & Wireless in
Local

loop

(WLL)

using

CDMA

Technology

called bfone and Tarang respectively. BSNL is dominant operator in

fixed line. As on December 31, 2007, BSNL had 81% marketshare of
fixed lines.
2. Cellular Mobile Telephone Services: BSNL is major provider of
Cellular Mobile Telephone services using GSM platform under
brandname Cellone. Pre-paid Cellular services of BSNL are know as
Excel. As on March 31, 2007 BSNL had 17% share of mobile telephony
in the country.
3. Internet:

BSNL is

providing internet

as dial-up

connection

(Sancharnet) and ADSL-Broadband Dataone. BSNL has around 50%

marketshare in broadband in India. BSNL has planned aggressive
rollout in broadband for current financial year.
4. Intelligent Network (IN): BSNL is providing IN services like televoting, toll free calling, premium calling etc.
BSNL Units

BSNL is divided into a number of administrative units, termed as

telecom circles, metro districts, project circles and specialized units, as
mentioned below:Telecom Circles: Telecom Circles & Metro districts are responsible for
providing service to the customers. There are 24 Telecom Circles and 2
Metro districts.

5.6 BSNL Present & Future

Since its corporatisation in October 2000, BSNL has been actively
providing connections in both Urban and Rural areas and the
efficiency of the company has drastically improved from the days when
one had to wait for years to get a phone connection to now when one
can get a connection in even hours. Pre-activated Mobile connections
are available at many places across India. BSNL has also unveiled very
cost-effective Broadband internet access plans (DataOne) targeted at
homes and small businesses.
2007 : A Land Mark Tear of Broadband
2007 has been declared as Year of Broadband in India and BSNL is
in the process of providing 5 million Broadband connectivity by the
end of 2007. BSNL has upgraded existing Dataone (Broadband)
connections for a speed of up to 2 MB/s without any extra cost. This 2
MB/s broadband service is being provided by BSNL at a cost of just
US$ 5.5 per month. Further, BSNL is rolling out new Broadband
services as Triple play (telecommunications).
BSNL is planning to increase its customer base to 108 million
customers by 2010. With the frantic activity in the communication
sector in India, the target appears achievable, however due to intense

competition in Indian Telecom sector in recent past BSNLs growth has

slowed down.
BSNL is pioneer of Rural Telephony in India. BSNL has recently bagged
80% of US$ 580 m (INR 2,500 crores) Rural Telephony project of
Government of India.
During Financial Year 2006-2007 (From April 01, 2006 to March
31, 2007) BSNL has added 9.6 million new customers in various
telephone services taking its customer base to 64.8 million. BSNLs
nearest competitor Bharti Airtel is standing at a customer base of 39
million. However, despite impressive growth shown by BSNL in recent
times, the Fixed line customer base of BSNL is declining. In order to
woo back its fixed-line customers BSNL has brought down long
distance calling rate under OneIndia plan, however, the success of the
scheme is not known. However, BSNL faces bleak fiscal 2006-2007 as
users flee, which has been accepted by the CMD BSNL.
Presently there is an intense competition in Indian Telecom sector and
various Telcos are rolling out attractive schemes and are providing
good customer services. However, BSNL being legacy operator and its
conversion from a Government Department, earns lot of criticism for
its poor customer service. Although in recent past there have been
tremendous improvement in working of BSNL but still it is much below
the Industrys Expectations. A large aging (average age 49 years(appx))
workforce (300,000 strong), which is mostly semi-illetrate or illeterate
is the main reason for the poor customer service. Further, the Top
management of BSNL is still working in BSNL on deputation basis
holding Government employee status thus having little commitment to
the organisation. Although in coming years the retirement profile of the
workforce is very fast and around 25% of existing workforce will retire

by 2010, however, still the workforce will be quite large by the industry
standards. Quality of the workforce will also remain an issue.

5.7 BSNL MAKETING STRATEGIES :

The state-owned operators biggest strength indeed is its extensive
infrastructure. BSNL has about 650,000 km of optic fibre cable (OFC)
network across the country, which is significantly larger than any
other pan-Indian players. It also has a wide network of copper wires
and tower sites that covers almost all populated villages in the country
through village public telephones. Its GSM services are available in
over 350,000 villages. BSNL offers connectivity in remote areas like the
Siachen Glacier as well as inaccessible areas in Madhya Pradesh,
Himachal Pradesh and the Northeast.
Incorporated in 2000, BSNL became the largest mobile operator in the
country after launching these services in 2002. By 2006, it had a
mobile customer base of 26 million and a market share of 18 per cent.
It is ranked fifth in the mobile segment with 97.99 Million subscribers
as of June 2013, after Bharti Airtel (190.91 Million users). However,
competition from private players, a capacity crunch, the PSU burden,
political interference, and the inability to keep pace with change in one
of the worlds most vibrant telecom markets started telling on the
companys performance.
BSNL is a large communications services provider in India across the
fixed and mobile telephony segments. However, it is no longer
profitable. The company has faced stiff competition on two fronts the
consumer shift from fixed line to mobile telephony and price wars in
the mobile space. The company has not been able to address these
issues and has, therefore, accumulated losses year after year, says
Harish Bijoor brand expert and chief executive officer, Harish Bijoor

Consults, Inc. BSNL is optimistic about a turn around after 2018 if it

receives the financial assistance
BSNL has been losing subscribers in both the wireless and wireline
segments. The wireline subscriber loss has had a bigger impact on the
operator as this business was its mainstay for years. As of June 2013,
BSNLs wireline user base stood at 19.89 million as compared to 40
million three years ago. The income from wireline telephony dropped
from Rs 126.68 billion in 2007-08 to Rs 56.53 billion in 2011-12. That
said, BSNL still holds over 65 per cent share in this market.
Moreover, the company has not been able to capitalise on the 3G
opportunity despite having the first-mover advantage in this space. It
has a presence in about 1,300 cities, but accounts for only 3 million of
the total 15 million 3G users in India.
The operator, however, has a comfortable lead in the broadband
segment with a 65.6 per cent market share as of June 2013. It has set
up

world-class,

multi-gigabit,

multiprotocol

convergent

IP

infrastructure that supports convergent services like voice, data and

video.
BSNL is also the third largest mobile tower operator with a portfolio of
about 60,000 towers.

OBJECTIVES

To be the Leading Telecom Services provider by achieving higher

rate of growth so asto become a profitable enterprise.

To provide quality and reliable fixed telecom service to our

customer and thereby increase customers confidence

To provide customer friendly mobile telephone service of high

quality and play leading role as GSM operator in its area of
operation. Strategy for:

Rightsizing the manpower

Providing greater customer satisfaction Contribute towards:

Broadband customers base of 20 Mn in India by the end of 2011-12 as

per broadband policy 2004. Providing telephone connections in villages
as per Government policy. To leverage the existing infrastructure of
BSNL for facilitating implementation of other government programmes
and initiatives particularly in the rural areas.
Financial Performance Financial Performance In Rs Crores Parameters
2006-07 2007-08 2008-09 2009-10 2010-11Income 39,715 38,053
35,812 32,045 29687Expenditure 31,466 33,636 34,354 34,078
36001Net Profit 7,806 3,009 575 (-)1,823 (-)6384

SWOT ANALYSIS
Huge Optical Fibre network and associated bandwidth

Huge Resources

Total telecom service provider

Experienced telecom service provider

Service in Rural Areas

WEAKNESS
Poor marketing strategy Bureaucratic organizational set up Inflexibility
in mindset (DOT period legacies)Limited number of value added
services Legacy of poor service image Huge and aged manpower
Procedural delay slack of strategic alliances Problems like outdated

technologies, unproductive rural assets, social obligations, political

interference, Poor IT penetration within organization.

OPPORTUNITIES
Tremendous market growing at 20 lakh customers per month Under
tapped broadband services Untouched international market Can
capitalize on public sector image to grab governments ICT initiatives
Leveraging the brand image to source funds Fuller utilization of slack
resources Can make a kill through deep penetration and low cost
advantage

Broaden

market

expected

from

convergence

of

broadcasting, telecom and entertainment industry.

THREATS
Competition from private operators Keeping pace with fast
technological changes Market maturity in basic telephone segment
Multinational eyeing Indian telecom market Decreasing per line
revenues due to competitive pricing High bargaining power of
customers Private operators demand to do away with ADC can
seriously effect revenues Policies of government like OneIndia rates.
Critical Success Factors the limited number of areas in which
satisfactory results will ensure successful competitive performance for
the individual, department, or organization activities required for
ensuring the success your business. Critical success factors may
change over time, and may include items such as product quality,
employee attitudes, manufacturing flexibility, and brand awareness

CRITICAL SUCESS FACTORS:

Industry CSFs resulting from specific industry characteristics;
Strategy CSFs resulting from the chosen competitive strategy of the
business;

Environmental

CSFs

resulting

from

economic

or

technological changes; and Temporal CSFs resulting from internal

organizational needs and changes.
Rockart and Bullen presented five key sources of CSFs:
The industry,

Competitive strategy and industry position,

Environmental factors,

Temporal factors, and

Managerial position

The Industry Critical success CSFs common to all companies

operating

within

the

same

industry.

factor

Industrys

set

of

characteristics define its own CSFs Different each organization has its
own unique goals so while there may be some industry standard not
all firms in one industry will have identical CSFs. Some trade
associations offer benchmarking across possible common CSFs.
Competitive strategy and The nature of position in the marketplace or
the adopted strategy to industry position Critical success gain market
share gives rise to CSFs factor Differing strategies and positions have
different CSFs A firms current position in the industry (where it is
relative to other competitors in the industry and also the market
leader), its strategy, and its resources and capabilities will define its
CSFs The values of an organization, its target market etc will all
impact the CSFs that are appropriate for it at a given point in time.
Environmental Factors Critical Economic, regulatory, political, and
demographic changes create CSFs success factor for an organization.
These relate to environmental factors that are not in the control of the
organization but which an organization must consider in developing
CSFs Examples for these are the industry regulation, political

development and economic performance of a country, and population

trends.
Temporal Factors Critical short-term situations, often crises. success
factor

Critical

one-off

CSFs

resulting

from

specific

event

necessitating there In collusion. success factor Critical success factor

Managerial Position Critical An individual role may generate CSFs as
performance in a specific success factor Critical managers area of
responsibility may be deemed critical to the success of an success
factor organization. In organizations with departments focused on
customer relationships, a CSF for managers in these departments may
be customer relationship management.

STRATEGY FORMULATION:
Clear technology strategy Customer Orientation Strategy Extensive use
of IT Shorten the purchase-decision cycle marketing strategy needs to
be redefined and should focus around Value Added Services Overhaul
its

Human

Resource

Management

strategy

Restructuring

of

organization Immediate implementation of CDR based billing. Revenue

generation through Value Added Services(VAS).

CLEAR TECHNOLOGY STRATEGY:

BSNL should go in for innovative products based on convergent
technology in order to acquire dominant market position. This can be
achieved by Replacement of all the outdated technologies immediately,
Redeployment of unutilized capacities should be considered first. Early
deployment of cost effective wifi/wi max technologies Increasing the
capital investment in convergent technologies even if it renders certain
in use technologies redundant. In spite of cost implications the
alternatives of scaling/upgrading of existing technology should not be
considered since it will not yield the desired results. Instead the focus

should be on achieving dominant market position through large-scale

deployment of new technology

CUSTOMER ORIENTATION STRATEGY:

It will retain existing customers as well as to attract new customers by
Creating

Service-Oriented

culture

within

the

organization.

Introducing flexible Registration Terms so that new customers are

attracted. Educating the customer about services in detail and
respective

tariff

structure

Introducing

service

at

door-step.

successful loyalty program becomes the driving force in customer

relationship management strategy

EXTENSIVE USE OF IT :
It will improve operations but can add to greater customer satisfaction.
Despite being technology intensive organization IT penetration in BSNL
is not high. Presently, the use of IT in BSNL is restricted to DQ
(Directory

Enquiry),

IVRS

(Interactive

Voice

Response

System)

Accounting and billing systems Commercial & Fault Repair System

package Telephone Directory on CD ROM and on the Internet. BSNL
should create intra-BSNL IT network connecting all the SDCAs (short
distance charging area)through VPN network for the organizations own
use to improve efficiency and transparency. Instead of integrating the
existing segment specific software, it is recommended that standard
integrated packages should be considered.

SHORTEN THE PURCHASE-DECISION CYCLE:

BSNL should redefine procurement processes to shorten the purchasedecision cycle, which is critical in project implementation to any
telecom service provider. BSNL should enter in long term supply
contract with world-class players to come out of mantra of tendering

process. This will help BSNL to counter the strategy of its competitors
to stall the very procurements of critical items.

BSNLS

MARKETING

STRATEGY

NEEDS

TO

BE

REDEFINED:
It should focus around Value Added Services, building strong
distribution chain and differential treatment to premium/corporate
customers Marketing is going to be the key to success BSNL should
come out with a variety of schemes for the end subscriber, both
commercial and residential.

HUMAN RESOURCE MANAGEMENT:

It has a vast manpower of 2,82,690 as per march 2011. To meet the
technological challenges, employees need to be trained for technology
up-gradation,

modernization,

computerization

etc

in a

targeted

manner. Though different training programs are being run in various

training centers of BSNL to impart technology based training, they
seem to be outdated in the fast changing competitive environment and
with formation of corporate. The dynamics of transition from a
lethargic government organization to a professionally running company
requires tremendous up gradation in Human Resources.
There are various aspects of managing an organization that many
employees even at top levels in BSNL are unaware of. At one hand the
competition has brought in the requirement to learn professional skills
in fields like Marketing, HRD, Finance etc.
BSNL need to mend its Human Resource Management strategy and
should focus on Tie up with top business schools in India for training
their managers at various levels. Redeploying its manpower from bigger
cities to smaller ones Coming out with VRS/CRS for manpower above
the age of 50. Creating value through employee motivation and should

develop reward and punishment system The VRS/CRS scheme is likely

to be opposed by the unions and the implementation may be difficult
in the politicized environment. However, rightsizing the organization is
of paramount importance for the long run interest.

RESTRUCTURING OF ORGANIZATION:
BSNLs organization structure still remains more or less functional in
structure.

Restructuring

of

organization

can

with

each

product/segment considered as a separate business will help in Better

management Improved segmental efficiencies Improved organizational
communication

Better performance monitoring Develop focus on

revenue

REVENUE

GENERATION

THROUGH

VALUE

ADDED

SERVICES(VAS)
The major chunk of these revenues have come from basic services and
only recently the revenues from cellular business (to the tune of Rs
3000 cr. per annum) . Moreover ADC(Access Deficit Charge) and interconnect charges income have decreased due to influence of TRAI. With
continuous decrease in long distance call rates and growth of private
network the revenues from ADC and inter-connect charges will
eventually disappear. BSNL should realize that the basic services
market and revenues from it are also shrinking and it is necessary for
a telecom service provider like BSNL to concentrate on increasing
revenues through VAS.
While many of the operators in India and outside are generating more
than 25% of their revenues through VAS, BSNL cannot attribute even
5% of its revenues to VAS. I
In order to succeed the strategy of BSNL should be built around
strengthening its VAS like SMS, MMS, broadband content generation
etc. and marketing them. BSNL can also go for large-scale tie-ups with
content providers.

 BSNL should change its very strategy of acting as follower to that of

leader. Instead of reacting to other operators move it should start
acting proactively. The overall strategy of BSNL can be of concentrating
on the mobile and broadband business in near future and to
immediately phase out loss making businesses like telegraph. BSNL
can leverage on its pan India reach and economies of scale to achieve
overall cost leadership. At the same time capital investments can be
made in next generation networks where stress should be on Wi-Max,
content based data service and VOIP. Emphasis on organizational
restructuring coupled with customer orientation and operational
efficiency can help BSNL find place in Asian Telecom market.
The Below stated is the details of comprehensive plans and tariffs,
BSNL frame for the different segment of society. The plans and tariff
are being revised from time to time as per the market scenario and
customer requirement.