Description
The presentation on the analysisof telecom industry and it highlights the following parameters studies the current trends in the telecom industry including its PESTAL analysis, SWOT analysis and application of porter five forces. It also suggests market entry strategy for new telecom company into indian telecom market.
Group 3 Sameer Mahajan (09FT-078) Mahalingam (09FT-079) Manjari Malpani(09FT-081) Manmeet Gill(09FT-082) Meenal Gupta(09FT-083) Megha Bhatt (09FT-084)
Indian Telecom Sector Evolution
? Reforms in 1980s - private sector was allowed in telecommunications ? ?
?
? ? ?
equipment manufacturing 1985- DOT was established 1986 – Conversion of DOT into VSNL & MTNL (wholly Govt. owned subsidiaries created) 1995 – commercial launch of mobile services (but slow growth due to high tariffs) 1997 -Telecom Regulatory Authority of India created. 1999 -Cellular Services are launched in India. New National Telecom Policy is adopted. 2000-DoT becomes a corporation, BSNL
Overview of the Market
? Fourth largest telecom market in Asia after China, Japan and South ? ? ? ?
?
?
Korea. The Indian telecom network is the eighth largest in the world and the second largest among emerging economies. The Indian telecom market size of over US $ 8 billion is expected to increase three fold by 2012. Massive growth in mobile phone users This exponential growth can be attributed to the introduction of digital cellular technology and decrease in tariffs In2009, Indian telecom sector added 170 million phone connections to take the total subscriber base to 550 million Enabler of economic growth - single largest component of the country's GDP with 15.4 per cent by 2014
Growth in Mobile subscriber base
Segment wise growth
Attractive factors
? Despite price war, vast population of India of over 1 Billion which ? ? ? ?
makes it as one of the biggest telecom market in the world Expected to grow at compound annual growth rate of around 15 per cent between 2009-10 and 2013-14 Internet Protocol television (IPTV) and 3G are the future drivers of growth Teledensity stands at just 32% representing a huge revenue potential for all the telecom operators. At the verge of entering 2nd phase of revolution – from Voice to Data
Tell-tale signs of Growth story
? Investment in the market is expected to be US$ 24 billion by 2010 and ? ? ? ? ? ?
number of mobile subscribers which is estimated to increase to 60 billion by 2012 The cumulative FDI inflows $ 3.62 billion,(7.99% of the total FDI inflows into the country) Buoyed by the rapid surge in the subscriber base, huge investments are being made into this industry Maxis Communications-owned mobile service provider Aircel is planning to invest close to US$ 5 billion over the next four years Srei Group's Quippo Telecom Infrastructure Ltd (QTIL) plans to invest US$ 3 billion in 2008-09 to ramp up its telecom infrastructure business. The Central public sector enterprises (CPSEs) have lined up investments of US$ 35.09 billion in infrastructure sectors like telecom Vodafone Essar will invest US$ 6 billion over the next three years increase its mobile subscriber base from 40 mn at present to 100 mn.
SWOT Analysis
Strengths
? Strong mobile subscribers growth(around 10%) , with latest
technology being offered at faster pace ? An attractive business environment witnessed by number of foreign players entering the market ? FDI limit increased to 74% ? Unified license regime
Weakness
? Lowest call tariffs in the world. ? Primarily a voice based market ? Delayed implementation of key policies because of dispute
among TRAI, telecom ministry
SWOT Analysis
Opportunities
? The large untapped potential in India’s rural markets(1.9% teledensity ? ? ? ?
in rural markets as compared to the national level of 18%) On an average, about 6–7 million new users added per month, making India the world’s fastest growing wireless services market Low broadband penetration, only 9 million subscribers M-Banking, M-Commerce & M-Gaming are the next drivers of growth Among the countries offering the highest rates of return on investment
Threats
? Low cost service providers – break even possible only in the long term ? Regulatory interference ? MNP will add further pressure to operator to retain the existing
customer
Threat from New Entrants
Supply Side Economies Of Scale
? Declining ARPU ? Other FC like BPO ? Extremely high infrastructure setup costs ? Spectrum License cost
Demand Side Benefits
? Brand pull exists to some extent for brands like Airtel, Vodafone, Idea
Restrictive Govt Policy
? Spectrum and license allocation
? 3G and Number portability policy still unclear.
? 74% FDI cap. ? Minimum requirement of number of towers.
Power of the buyer
? Lack of differentiation among the service provider
? Cut throat competition
? Customer is price sensitive
? Low switching costs ? Number portability to have negative impact
Supplier Bargaining Power
? Large number of suppliers.
Physical Infra
Network Infrastructure
Supplier
-Ericsson -Siemens Networks -Cisco -Huawei -IBM -TCS -Bharti Infratel -Indus Towers -IBM Daksh -Mphasis -Hinduja TMT -Aegis BPO -Nortel
? Shared tower infrastructure.
? Limited pool of skilled managers and engineers
especially those well versed in the latest technologies.
Information Technology Passive Infrastructure Call Center Outsourcing
? Medium cost of switching since changing their
hardware would lead to additional cost in modifying the architecture.
? Overall influence on the industry - medium
Rivalry among Existing Competitors
? High Exit Barriers
? High Fixed Cost ? 6-7 players in each region ? 3 out of 4 BIG-Four present in each region ? Very less time to gain advantage by an innovation (Eg. Caller
tunes, life time card)
? Price wars
Market Share
Threat of Substitutes
? Some Substitutes:
? VOIP (Skype, Messenger etc.) ? Online Chat ,Email ? DTH operators providing internet service ? Satellite phones
? None of the above a major threat in current scenario. ? Price-Performance trade-off very high. ? Issues of mobility and penetration with the substitutes.
Telecom Market Segmentation
Entry Strategy
? Strategic Intent ? Be among the industry leaders ? Long term focus ? Cost effective ? Focus ? Regional Focus initially and then expand: Eg Idea in UP and Maharashtra ? Tap in the ever expanding rural market ? Focus on the “Service Delivery” in terms of call center complaints, efficient change in plans etc. : Eg Docomo’s new plan every hour ? Customer Acquisition ? Tap into already disgruntled customers with the MNP in the urban market ? Acquire new customers in the rural market with the coming of affordable rural specific phones
Criteria for selection of a mode of entry
• Goal of the company regarding the amount of business desired, geographical coverage, time span involvement intended. • Company size in terms of sales and assets. ? Product line and nature of a company’s product; that is, whether the product is for industrial or consumer use, high or low priced, its technological content, etc. • Trade barriers and regulations in the country concerned. • Competition in the market.
Strategy Development
? Market Entry ? Technology Transfer : Merger/Acquisition/Alliances Eg: Tata Docomo, Uninor ? In house R&D ? Outsourcing Model of Airtel ? Strategic Tie Ups ? Handset Makers especially the low cost ones to tap in the rural market ? Rules of the Game ? In order to be the leader, you need to change the rules of the game. Focus on the area which in uncovered till now. Eg: Tata Docomo pay per second rate.
Strategy Implementation
? Managing Technology ? With ever changing Technology(2G,3G,4G-anytime soon) in the Industry, there is a need to be efficient in learning and managing new technology ? Strategic Plans and moves to tap customers towards new technology adoption to overcome the chasm. Eg: BSNL 3G, Idea MNP, Docomo 3G ? Managing and Leveraging Resources ? Spectrum ? Infrastructure
Vision
By 2015 We will be the most loved brand, enriching the lives of millions.
Organizational Structure
Multidivisional structure Functional Structure
Organizational Structure
? Hybrid of the Functional and Multidivisional
Structure
Functional Structure
• Finance • HR • Legal & Regulatory • IT • Internal Assurance • Supply Chain
Multidivisional Structure
• Enterprise Services • DTH Services • Mobile services • Telemedia Services
Organizational Structure
? The Hybrid Structure allows for ? High Control (FS) ? Clear definition of responsibilities (FS) ? Flexibility (MDS) ? Ownership of strategy (MDS) ? Specialization of competences (MDS)
Service innovation in Mobile Value Added Services (MVAS)
? Imagine a situation:
An Indian trader, dealing with red chillies, uses a mobile application that gives a minute-by-minute comparison of the domestic prices of chillies with those of Chicago trade board. He then decides whether to export the chillies or sell them in the domestic markets.
? Service innovation is the key facilitator towards
driving higher ARPU levels. These innovation phases are captured in the Service Innovation Curve (SIC).
Service innovation curve (SIC)
Phase of ebullience
? Characterized by the public perception of value arising out of ? ?
? ?
?
?
pure speculations and promises of MVAS. Services will be launched after significant promotion in press and industry bodies. Launching of new products and brands will be the key priority for the marketers as they will aim to maximize the impact of the mass media hype. The innovation methods by service providers will focus on the excitement generated among the customers. Skimming will be followed as a pricing strategy whereby the marketers will set higher price points for the services. It will help the firm to recover sunk costs before competition crowds the market. Even if 5-15% of the user base adopts MVAS at this stage, the capital expenditure will be recovered to a reasonable extent due to high premium in pricing.
Phase of ebullience
Marketing Focus
• Increase brand awareness • Customer community participation • Need creation
Pricing of VAS
• Flat rates including premium • Contractual subscription
Revenue • Content creators: 15% Sharing (as a % • Content aggregators: 15% of total revenue • Telecom service providers: 70% from MVAS)
Disenchantment Phase
? Dominated by customer realization of the inadequacies
associated with the MVAS offerings. ? MVAS providers will recognize the chasm in the ‘service innovation’ front. They realise that this chasm is due to their extended focus in the marketing of the MVAS offerings. ? There will be a growing discontent among customers as the high price points will not justify the utility of the delivered services. ? The key dictates in this phase will be similar to those of the ebullience phase, the difference being the lacking intensity in the marketing focus and a slight increase in the revenue share of content creators and content aggregators.
Radical Innovation Phase
? This phase will mark the radical strategies by MVAS providers to
regain their lost market shares and customer confidence.
? The radical strategies will be aimed towards disrupting the
dynamics of the market and they will be complemented by parallel efforts to work on the feedback of the end customer. will effectuate response-based media advertising whereby customers will be targeted on a personalised and non-intrusive basis. engage him/her in the design and deployment stages of innovation.
? The biggest facilitator will be the mobile advertising platform. It
? The marketers will reach out to the customer and proactively
Radical Innovation Phase
Marketing Focus
• Increase customer retention • Acquire new customers • Voice of customer programs
Pricing of VAS
• Advertisement funded calls • Home zone pricing • Unlimited voice calls / data usage • Choice between cheaper tariffs and subsidies • Lifetime subscriptions
Revenue Sharing (as a % of total revenue from MVAS)
• Content creators: 20% • Content aggregators: 30% • Telecom service providers: 50%
Incremental innovation
? VAS players will realize that their service basket is seemingly
incompetent to suffice the entire needs of the customer.
? This stage will embark identification of collaborative growth
opportunities by telecom service providers and greater efforts to reconcile the VAS poviders’ competency with the collaborator’s resources pace.
? There will be several content creators and content aggregators
displaying varying degrees of collective innovation.
? The telecom service providers will infuse greater flexibility in
their scalable technical architectures and greater efficiency in their customer orientation.
Incremental innovation
Marketing Focus
• • • • • Improve marketing ROI Increase customer lifetime value Integrate communications Ethnographical studies on customer personas Customer advisory boards
Pricing of VAS
• Charging by traffic volumes • Charging by call durations using low pulse • Differential pricing for data unit transmissions
Revenue Sharing (as a % of total revenue from MVAS)
• Content creators: 30% • Content aggregators: 35% • Telecom service providers: 35%
Value innovation phase
? Reinvigorated paradigm, where the service providers will place
equal emphasis on both value and innovation.
? Innovation will be aligned with utility, cost and price positions
and MVAS providers will explore new business opportunities.
? There will be stringent regulations and guidelines for MVAS,
effectuating the distribution of standalone VAS through retail channels without being linked to a service provider. memory cards or any newer channels.
? The VAS will be transferred using bluetooth, activated using ? Extensive reversal towards internal business processes. The
internal focus will complement the external focus and ensure a perfect alignment of the service offerings with the intuitive needs of the customer. This explains the absence of a dip in the Service Innovation Curve in this stage.
Value innovation phase
Marketing Focus
• Targeting at individual levels • Personalization
Pricing of VAS
• Customized plans • Tailored pricing
Revenue Sharing (as a % of total revenue from MVAS)
• Content creators: 45% • Content aggregators: 40% • Telecom service providers: 15%
Revenue sharing agreements
Positioning of MVAS on the Service Innovation Curve
? The positioning of a particular MVAS is guided by the
innate focus on service innovation.
? This focus will radically differ across countries as
ethnocentric understanding will be a key input to service innovation.
? As a result, the same MVAS may have different
positioning on the SIC across different countries.
? For example, innovation within a gaming MVAS
having hand-painted, textured and stylized avatars may sluggishly rise through the stage of ebullience in South Korea as compared to India.
Positioning of MVAS on the Service Innovation Curve
Positioning of MVAS on the Service Innovation Curve
? Mikoishi’s real time strategy mobile gaming:
? South Korea is the market leader when it comes to gaming
hardware, handsets and bandwidth.
? Currently, Mikoishi is making greater efforts in brand
awareness and using flat and contractual methods of pricing for this gaming service.
? Voice SMS in India:
? There is a growing realisation that voice SMS is similar to
voice mail.
? It has been packaged differently so that we have an old wine
in a new bottle.
? Thus, the service is entering a phase of radical innovation,
wherein the offerings need to be aligned to address the needs of the masses or face obsolescence.
Positioning of MVAS on the Service Innovation Curve
? Caller Ring Back Tunes (CRBT), India:
? The mobile subscriber base in India had welcomed CRBTs
? However, the exclusivity and relevance of the service has lost its steam
with time. CRBTs.
? The operators are currently piloting innovative measures like ad-funded ? The service is slated to face obsolescence unless a radical innovation
facilitates the turnaround.
? Alokito tele-medicine initiative, Bangladesh:
? Ericsson’s Alokito Bangladesh project brought high-speed, Internet-
enabled mobile health care to the districts of Dhaka.
? It has been positioned at the phase of incremental innovation as the
diseases covered under the initiative have increased with time.
? District wide disease surveillance and control have also been
accentuated along with collection of basic health data in remote areas.
Focus will be on reducing managerial effect and developing lost cost model for consumers where all operational activities will be outsourced resulting in high fixed and low variable costs
Mobile services Licensing Costs
? GSM license costs 1660 crore rupees
? Planned to be revised soon by government ? Pan-India bid for third generation spectrum is worth
US$ 3.6 billion ? BWA pan license costs 12847.77 crore rupees
? Acquires by Infotel only
Other Costs
? Service delivery - 20 million dollars/year
? IT services – 75 million dollars/year ? Infrastructure cost including maintenance of network
– 350 million dollars/year ? Outsourcing model to be used where contracts are handed for 5 or 10 years ? Additional capital needed for promotion and marketing activities
FDI norms
? In Basic, Cellular Mobile, Paging and Value Added Service, and
Global Mobile Personal Communications by Satellite, Composite FDI permitted is 74% ? 100% Foreign Direct Investment (FDI) is allowed through automatic route for manufacturing of telecom equipments. ? FDI upto 100% permitted in respect of the following telecom services: ? Infrastructure Providers providing dark fibre ? Electronic Mail; and ? Voice Mail
doc_358381789.pptx
The presentation on the analysisof telecom industry and it highlights the following parameters studies the current trends in the telecom industry including its PESTAL analysis, SWOT analysis and application of porter five forces. It also suggests market entry strategy for new telecom company into indian telecom market.
Group 3 Sameer Mahajan (09FT-078) Mahalingam (09FT-079) Manjari Malpani(09FT-081) Manmeet Gill(09FT-082) Meenal Gupta(09FT-083) Megha Bhatt (09FT-084)
Indian Telecom Sector Evolution
? Reforms in 1980s - private sector was allowed in telecommunications ? ?
?
? ? ?
equipment manufacturing 1985- DOT was established 1986 – Conversion of DOT into VSNL & MTNL (wholly Govt. owned subsidiaries created) 1995 – commercial launch of mobile services (but slow growth due to high tariffs) 1997 -Telecom Regulatory Authority of India created. 1999 -Cellular Services are launched in India. New National Telecom Policy is adopted. 2000-DoT becomes a corporation, BSNL
Overview of the Market
? Fourth largest telecom market in Asia after China, Japan and South ? ? ? ?
?
?
Korea. The Indian telecom network is the eighth largest in the world and the second largest among emerging economies. The Indian telecom market size of over US $ 8 billion is expected to increase three fold by 2012. Massive growth in mobile phone users This exponential growth can be attributed to the introduction of digital cellular technology and decrease in tariffs In2009, Indian telecom sector added 170 million phone connections to take the total subscriber base to 550 million Enabler of economic growth - single largest component of the country's GDP with 15.4 per cent by 2014
Growth in Mobile subscriber base
Segment wise growth
Attractive factors
? Despite price war, vast population of India of over 1 Billion which ? ? ? ?
makes it as one of the biggest telecom market in the world Expected to grow at compound annual growth rate of around 15 per cent between 2009-10 and 2013-14 Internet Protocol television (IPTV) and 3G are the future drivers of growth Teledensity stands at just 32% representing a huge revenue potential for all the telecom operators. At the verge of entering 2nd phase of revolution – from Voice to Data
Tell-tale signs of Growth story
? Investment in the market is expected to be US$ 24 billion by 2010 and ? ? ? ? ? ?
number of mobile subscribers which is estimated to increase to 60 billion by 2012 The cumulative FDI inflows $ 3.62 billion,(7.99% of the total FDI inflows into the country) Buoyed by the rapid surge in the subscriber base, huge investments are being made into this industry Maxis Communications-owned mobile service provider Aircel is planning to invest close to US$ 5 billion over the next four years Srei Group's Quippo Telecom Infrastructure Ltd (QTIL) plans to invest US$ 3 billion in 2008-09 to ramp up its telecom infrastructure business. The Central public sector enterprises (CPSEs) have lined up investments of US$ 35.09 billion in infrastructure sectors like telecom Vodafone Essar will invest US$ 6 billion over the next three years increase its mobile subscriber base from 40 mn at present to 100 mn.
SWOT Analysis
Strengths
? Strong mobile subscribers growth(around 10%) , with latest
technology being offered at faster pace ? An attractive business environment witnessed by number of foreign players entering the market ? FDI limit increased to 74% ? Unified license regime
Weakness
? Lowest call tariffs in the world. ? Primarily a voice based market ? Delayed implementation of key policies because of dispute
among TRAI, telecom ministry
SWOT Analysis
Opportunities
? The large untapped potential in India’s rural markets(1.9% teledensity ? ? ? ?
in rural markets as compared to the national level of 18%) On an average, about 6–7 million new users added per month, making India the world’s fastest growing wireless services market Low broadband penetration, only 9 million subscribers M-Banking, M-Commerce & M-Gaming are the next drivers of growth Among the countries offering the highest rates of return on investment
Threats
? Low cost service providers – break even possible only in the long term ? Regulatory interference ? MNP will add further pressure to operator to retain the existing
customer
Threat from New Entrants
Supply Side Economies Of Scale
? Declining ARPU ? Other FC like BPO ? Extremely high infrastructure setup costs ? Spectrum License cost
Demand Side Benefits
? Brand pull exists to some extent for brands like Airtel, Vodafone, Idea
Restrictive Govt Policy
? Spectrum and license allocation
? 3G and Number portability policy still unclear.
? 74% FDI cap. ? Minimum requirement of number of towers.
Power of the buyer
? Lack of differentiation among the service provider
? Cut throat competition
? Customer is price sensitive
? Low switching costs ? Number portability to have negative impact
Supplier Bargaining Power
? Large number of suppliers.
Physical Infra
Network Infrastructure
Supplier
-Ericsson -Siemens Networks -Cisco -Huawei -IBM -TCS -Bharti Infratel -Indus Towers -IBM Daksh -Mphasis -Hinduja TMT -Aegis BPO -Nortel
? Shared tower infrastructure.
? Limited pool of skilled managers and engineers
especially those well versed in the latest technologies.
Information Technology Passive Infrastructure Call Center Outsourcing
? Medium cost of switching since changing their
hardware would lead to additional cost in modifying the architecture.
? Overall influence on the industry - medium
Rivalry among Existing Competitors
? High Exit Barriers
? High Fixed Cost ? 6-7 players in each region ? 3 out of 4 BIG-Four present in each region ? Very less time to gain advantage by an innovation (Eg. Caller
tunes, life time card)
? Price wars
Market Share
Threat of Substitutes
? Some Substitutes:
? VOIP (Skype, Messenger etc.) ? Online Chat ,Email ? DTH operators providing internet service ? Satellite phones
? None of the above a major threat in current scenario. ? Price-Performance trade-off very high. ? Issues of mobility and penetration with the substitutes.
Telecom Market Segmentation
Entry Strategy
? Strategic Intent ? Be among the industry leaders ? Long term focus ? Cost effective ? Focus ? Regional Focus initially and then expand: Eg Idea in UP and Maharashtra ? Tap in the ever expanding rural market ? Focus on the “Service Delivery” in terms of call center complaints, efficient change in plans etc. : Eg Docomo’s new plan every hour ? Customer Acquisition ? Tap into already disgruntled customers with the MNP in the urban market ? Acquire new customers in the rural market with the coming of affordable rural specific phones
Criteria for selection of a mode of entry
• Goal of the company regarding the amount of business desired, geographical coverage, time span involvement intended. • Company size in terms of sales and assets. ? Product line and nature of a company’s product; that is, whether the product is for industrial or consumer use, high or low priced, its technological content, etc. • Trade barriers and regulations in the country concerned. • Competition in the market.
Strategy Development
? Market Entry ? Technology Transfer : Merger/Acquisition/Alliances Eg: Tata Docomo, Uninor ? In house R&D ? Outsourcing Model of Airtel ? Strategic Tie Ups ? Handset Makers especially the low cost ones to tap in the rural market ? Rules of the Game ? In order to be the leader, you need to change the rules of the game. Focus on the area which in uncovered till now. Eg: Tata Docomo pay per second rate.
Strategy Implementation
? Managing Technology ? With ever changing Technology(2G,3G,4G-anytime soon) in the Industry, there is a need to be efficient in learning and managing new technology ? Strategic Plans and moves to tap customers towards new technology adoption to overcome the chasm. Eg: BSNL 3G, Idea MNP, Docomo 3G ? Managing and Leveraging Resources ? Spectrum ? Infrastructure
Vision
By 2015 We will be the most loved brand, enriching the lives of millions.
Organizational Structure
Multidivisional structure Functional Structure
Organizational Structure
? Hybrid of the Functional and Multidivisional
Structure
Functional Structure
• Finance • HR • Legal & Regulatory • IT • Internal Assurance • Supply Chain
Multidivisional Structure
• Enterprise Services • DTH Services • Mobile services • Telemedia Services
Organizational Structure
? The Hybrid Structure allows for ? High Control (FS) ? Clear definition of responsibilities (FS) ? Flexibility (MDS) ? Ownership of strategy (MDS) ? Specialization of competences (MDS)
Service innovation in Mobile Value Added Services (MVAS)
? Imagine a situation:
An Indian trader, dealing with red chillies, uses a mobile application that gives a minute-by-minute comparison of the domestic prices of chillies with those of Chicago trade board. He then decides whether to export the chillies or sell them in the domestic markets.
? Service innovation is the key facilitator towards
driving higher ARPU levels. These innovation phases are captured in the Service Innovation Curve (SIC).
Service innovation curve (SIC)
Phase of ebullience
? Characterized by the public perception of value arising out of ? ?
? ?
?
?
pure speculations and promises of MVAS. Services will be launched after significant promotion in press and industry bodies. Launching of new products and brands will be the key priority for the marketers as they will aim to maximize the impact of the mass media hype. The innovation methods by service providers will focus on the excitement generated among the customers. Skimming will be followed as a pricing strategy whereby the marketers will set higher price points for the services. It will help the firm to recover sunk costs before competition crowds the market. Even if 5-15% of the user base adopts MVAS at this stage, the capital expenditure will be recovered to a reasonable extent due to high premium in pricing.
Phase of ebullience
Marketing Focus
• Increase brand awareness • Customer community participation • Need creation
Pricing of VAS
• Flat rates including premium • Contractual subscription
Revenue • Content creators: 15% Sharing (as a % • Content aggregators: 15% of total revenue • Telecom service providers: 70% from MVAS)
Disenchantment Phase
? Dominated by customer realization of the inadequacies
associated with the MVAS offerings. ? MVAS providers will recognize the chasm in the ‘service innovation’ front. They realise that this chasm is due to their extended focus in the marketing of the MVAS offerings. ? There will be a growing discontent among customers as the high price points will not justify the utility of the delivered services. ? The key dictates in this phase will be similar to those of the ebullience phase, the difference being the lacking intensity in the marketing focus and a slight increase in the revenue share of content creators and content aggregators.
Radical Innovation Phase
? This phase will mark the radical strategies by MVAS providers to
regain their lost market shares and customer confidence.
? The radical strategies will be aimed towards disrupting the
dynamics of the market and they will be complemented by parallel efforts to work on the feedback of the end customer. will effectuate response-based media advertising whereby customers will be targeted on a personalised and non-intrusive basis. engage him/her in the design and deployment stages of innovation.
? The biggest facilitator will be the mobile advertising platform. It
? The marketers will reach out to the customer and proactively
Radical Innovation Phase
Marketing Focus
• Increase customer retention • Acquire new customers • Voice of customer programs
Pricing of VAS
• Advertisement funded calls • Home zone pricing • Unlimited voice calls / data usage • Choice between cheaper tariffs and subsidies • Lifetime subscriptions
Revenue Sharing (as a % of total revenue from MVAS)
• Content creators: 20% • Content aggregators: 30% • Telecom service providers: 50%
Incremental innovation
? VAS players will realize that their service basket is seemingly
incompetent to suffice the entire needs of the customer.
? This stage will embark identification of collaborative growth
opportunities by telecom service providers and greater efforts to reconcile the VAS poviders’ competency with the collaborator’s resources pace.
? There will be several content creators and content aggregators
displaying varying degrees of collective innovation.
? The telecom service providers will infuse greater flexibility in
their scalable technical architectures and greater efficiency in their customer orientation.
Incremental innovation
Marketing Focus
• • • • • Improve marketing ROI Increase customer lifetime value Integrate communications Ethnographical studies on customer personas Customer advisory boards
Pricing of VAS
• Charging by traffic volumes • Charging by call durations using low pulse • Differential pricing for data unit transmissions
Revenue Sharing (as a % of total revenue from MVAS)
• Content creators: 30% • Content aggregators: 35% • Telecom service providers: 35%
Value innovation phase
? Reinvigorated paradigm, where the service providers will place
equal emphasis on both value and innovation.
? Innovation will be aligned with utility, cost and price positions
and MVAS providers will explore new business opportunities.
? There will be stringent regulations and guidelines for MVAS,
effectuating the distribution of standalone VAS through retail channels without being linked to a service provider. memory cards or any newer channels.
? The VAS will be transferred using bluetooth, activated using ? Extensive reversal towards internal business processes. The
internal focus will complement the external focus and ensure a perfect alignment of the service offerings with the intuitive needs of the customer. This explains the absence of a dip in the Service Innovation Curve in this stage.
Value innovation phase
Marketing Focus
• Targeting at individual levels • Personalization
Pricing of VAS
• Customized plans • Tailored pricing
Revenue Sharing (as a % of total revenue from MVAS)
• Content creators: 45% • Content aggregators: 40% • Telecom service providers: 15%
Revenue sharing agreements
Positioning of MVAS on the Service Innovation Curve
? The positioning of a particular MVAS is guided by the
innate focus on service innovation.
? This focus will radically differ across countries as
ethnocentric understanding will be a key input to service innovation.
? As a result, the same MVAS may have different
positioning on the SIC across different countries.
? For example, innovation within a gaming MVAS
having hand-painted, textured and stylized avatars may sluggishly rise through the stage of ebullience in South Korea as compared to India.
Positioning of MVAS on the Service Innovation Curve
Positioning of MVAS on the Service Innovation Curve
? Mikoishi’s real time strategy mobile gaming:
? South Korea is the market leader when it comes to gaming
hardware, handsets and bandwidth.
? Currently, Mikoishi is making greater efforts in brand
awareness and using flat and contractual methods of pricing for this gaming service.
? Voice SMS in India:
? There is a growing realisation that voice SMS is similar to
voice mail.
? It has been packaged differently so that we have an old wine
in a new bottle.
? Thus, the service is entering a phase of radical innovation,
wherein the offerings need to be aligned to address the needs of the masses or face obsolescence.
Positioning of MVAS on the Service Innovation Curve
? Caller Ring Back Tunes (CRBT), India:
? The mobile subscriber base in India had welcomed CRBTs
? However, the exclusivity and relevance of the service has lost its steam
with time. CRBTs.
? The operators are currently piloting innovative measures like ad-funded ? The service is slated to face obsolescence unless a radical innovation
facilitates the turnaround.
? Alokito tele-medicine initiative, Bangladesh:
? Ericsson’s Alokito Bangladesh project brought high-speed, Internet-
enabled mobile health care to the districts of Dhaka.
? It has been positioned at the phase of incremental innovation as the
diseases covered under the initiative have increased with time.
? District wide disease surveillance and control have also been
accentuated along with collection of basic health data in remote areas.
Focus will be on reducing managerial effect and developing lost cost model for consumers where all operational activities will be outsourced resulting in high fixed and low variable costs
Mobile services Licensing Costs
? GSM license costs 1660 crore rupees
? Planned to be revised soon by government ? Pan-India bid for third generation spectrum is worth
US$ 3.6 billion ? BWA pan license costs 12847.77 crore rupees
? Acquires by Infotel only
Other Costs
? Service delivery - 20 million dollars/year
? IT services – 75 million dollars/year ? Infrastructure cost including maintenance of network
– 350 million dollars/year ? Outsourcing model to be used where contracts are handed for 5 or 10 years ? Additional capital needed for promotion and marketing activities
FDI norms
? In Basic, Cellular Mobile, Paging and Value Added Service, and
Global Mobile Personal Communications by Satellite, Composite FDI permitted is 74% ? 100% Foreign Direct Investment (FDI) is allowed through automatic route for manufacturing of telecom equipments. ? FDI upto 100% permitted in respect of the following telecom services: ? Infrastructure Providers providing dark fibre ? Electronic Mail; and ? Voice Mail
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