A COMPARATIVE STUDY ON MAJOR TELECOM SERVICE

PROVIDERS IN INDIA

INTRODUCTION

The Information and Communication Technology (ICT) Industry in India has perceived a
tremendous growth in the past 1.5 decade. With the boom in technology, the ICT Industry has
experienced exciting possibilities, ranging from a speedy expansion in size to gaining importance
in the overall Indian economy. The escalated effect of the ICT industry has led to the formation
of a larger and more significant constituent of the overall export market. It is aiding the
improvement of the local and global competitiveness of Indian companies across industries. The
fact that the Indian ICT market is one of the most rapidly growing ICT market in the world for
the third year stands as a secured testament to the increased leverage of ICT by the domestic
industry [2]. Talking about the Telecommunications sector, which is a sub domain of the ICT
industry, the sector is growing at a remarkable pace and India is the second largest telecom
market globally since 2010. In April 2008, India surpassed the US as the second largest wireless
market and as an indicator to the swelling global influence of Indian telecom companies. Seven
Indians have featured in the list of the world's 100 most prominent and influential telecom
leaders, compiled by Global Telecoms Business industry magazine [1]. Forthcoming services
such as4G will further augment the growth rate. The world's leading telecom handsets
manufacturers, such as Nokia, Samsung, Micromax have their presence in India, along with
leading global service companies and infrastructure majors, such as AT&T, Ericsson, Alcatel,
Singapore Telecom and Siemens. India reached the target of having 300 million telephone
subscribers; becoming the second largest telecommunications network in the world after China
in June 2008. As per the report [3] India is having 800 million mobile subscribers and it expected
to reach 900 million by 2015. India is emerging as one of the fastest growing telecom markets in
the world. According to the report titled 'Mobile BRIC: Extreme Growth Ahead', BRIC (Brazil,
Russia India and China) India is the second largest mobile market in the BRIC nations, with 650
million mobile users, since 2012 (after China with 800million users). Indian telecom industry has
had a long way and is expected to soar even higher and the growth rate is expected to double
with every passing year. To make full use of this opportunity, a large number of players has
entered into the telecom industry, the major being Airtel, Vodafone, Idea, BSNL, Tata, Reliance.
In todays era, with the increase in telecom service providers, it has become essential for the
various companies to excel and have a competitive edge over the others. The firms must innovate
and come up with groundbreaking and novel services so as to stand out in the global market. It
would be quite interesting to know about the performance of the various telecom service
providers and to do a comparative analysis of them. This can disclose a number of facts about
their stand in the market and also what image do they carry among their customers. A range of
business matrices like year Total Expenses, net sales, Profit (%) after tax and capitalization
reflect the health and wealth of the companies and also affect the subscriber base. At the same
time it is essential to satisfy their customers in order to expand their subscriber base. Customer
satisfaction is significant to be cashed upon for an accentuated growth. The companies can be
compared on the basis of a number of parameters. The most significant ones can be, total net
sales profit after tax reduction, market capitalization and level of satisfaction of the customers.
Firstly, net sales is an important index of measuring a companys growth as it is the amount of
sales generated by a company after the deduction of returns, allowances for damaged or missing
goods and any discounts allowed. The sales number reported on a company's financial statements
is a net sales number, reflecting these deductions. It gives a more accurate picture of the actual
sales generated by the company, or the money that it expects to receive. Secondly, profit after tax
reduction, is the bottom line that reflects the position of the company as it is the net profits of a
company after taxation. Thirdly, market capitalization, which is a measurement of corporate or
economic size equal to the share price times the number of shares outstanding of a public
company, is regarded as a valuable index to appraise a firm. And finally, level of satisfaction is
the key indicator of the popularity of the service among the customers. Higher the level of
satisfaction of the customers, greater will be the net sales, profit after tax and market
capitalization. Thus, net sales, profit after tax, market capitalization and level of satisfaction have
been included in our factors to measure the performance of the telecom service providers in
India. As a matter of fact, not much literature is available concerning our present study. Thus, we
have come up with a novel research which compares the telecom companies on the basis of the
important business matrices as discussed above. In this paper, a comparative analysis of the
leading telecom service providers has been presented. Companies like Bharti Airtel, Vodafone
Communication, Idea Cellular, Reliance Communications and Tata Communication in India have
been chosen for the analysis on the basis of secondary data which includes last five year values
of net sales, profit after tax reduction, and market capitalization. The Level of Satisfaction (LOS)
of the Indian telecommunications customers has also been compared. The LOS has been
determined on the basis of various factors like network coverage; tariff rates, plan, bill
accountability, payment convenience, customer service etc. To achieve this objective, an
empirical study has been done and conclusions have been brought out on the basis of the data
collected though an online field survey. Section II discusses the notable features of the leading
telecom service providers in the Bhopal region of India. It is then followed by Section III which
illustrates the research methodology adopted for the present study. Section IV explains the data
analysis and findings. The last section presents conclusions, limitations and recommendations.

2. Telecom Service Providers in India The major telecom service providers in India are
as follows:-

2.1BSNL Bharat Sanchar Nigam Limited (abbreviated BSNL) is an Indian state-owned

Telecommunications company headquartered in New Delhi, India. It was incorporated on 15
September 2000 and took over the business of providing of telecom services and network
management from the erstwhile Central Government Departments of Telecom Services (DTS)
and Telecom Operations (DTO), with effect from 1 October 2000 on a going concern basis. It is
the largest provider of fixed telephony, largest broadband services provider with more than 60%
Market share, and fifth largest mobile telephony provider in India. However, in recent years the
company's revenues and market share have plummeted into heavy losses due to intense
competition in the Indian telecommunications sector. BSNL is India's oldest and largest
communication service provider (CSP). It had a customer base of 117 million as of January
2014.

2.2Bharti Airtel Bharti Airtel, formerly known as Bharti Tele-Ventures Limited (BTVL)
is India's largest cellular service provider with more than 75 million subscribers as of August
2008[5]. It also offers fixed line services and broadband services. It offers its TELECOM
services under the Airtel brand and is headed by Sunil Mittal. The company also provides
telephone services and Internet access over DSL in 14 circles. The company complements its
mobile, broadband & telephone services with national and international long distance services.
The company also has a submarine cable landing station at Chennai, which connects the
submarine cable connecting Chennai and singapore. The company provides end-to-end data and
enterprise services to the corporate customers through its nationwide fiber optic backbone, last
mile connectivity in fixed-line and mobile circles, VSATs, ISP and international bandwidth
access through the gateways and landing station.

2.3 Vodafone Communication Vodafone Communication, previously Hutchison Essar is

a cellular operator in India that covers 21 telecom circles in India. Despite the official name
being Vodafone Communication, its products are simply branded Vodafone. It offers both
prepaid and postpaid GSM cellular phone coverage throughout India and is especially strong in
the majormetros. Vodafone Communication provides 2G services based on 900 MHz and 1800
MHz digital GSM technology, offering voice and data services in 21 of the country's 23 license
areas.

2.4 Idea Cellular Idea Cellular is a wireless telephony company operating in various
states in India. It initially started in 1995 as a joint venture between the Tatas, Aditya Birla Group
and AT&Tby merging "'Wings Cellular'" operating in Madhya Pradesh, UP West, Rajasthan and
Tata Cellular as well as Birla AT&T Communications. Initially having a very limited footprint in
the GSM arena, the acquisition of Escotel in 2004 gave Idea a truly pan-India presence covering
Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, UttarPradesh (East
and West), Haryana, Kerala, Rajasthan and Delhi (inclusive of NCR) [7].The company has its
retail outlets under the "Idea n' U"banner. The company has also been the first to offer flexible
tariff plans for prepaid customers. It also offers GPRS services in urban areas. 2.5 Reliance
Communications Reliance Communications (formerly Reliance InfocomM), along with Reliance
Telecom and Flag Telecom, is part of Reliance Communications Ventures (RCoVL). According
to National Stock Exchange data, Anil Ambani controls Telecommunications Company. It is the
flagship company of the Reliance-Anil Dhirubhai Ambani Group, comprising of power (Reliance
Energy), financial services (Reliance Capital) and telecom initiatives of the Reliance ADA
Group. Reliance Infocomm is currently managed by Anil Dhirubhai Ambani. It uses CDMA2000
1x technology. RelCom is also into Wireline Business throughout India and has the largest OFC
backbone architecture [roughly 110,000 km] in the country. The company also has licenses in the
GSM telecom services space for most of the Telecom Circles (zones in layman's words). It
currently operates in 8 circles and plans to launch in the others soon. 2.6 Tata Communication
Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies, an Indian
conglomerate. It runs under the brand name Tata Communication in India, in various telecom
circles of India. The company forms part of the Tata Group's presence in the Telecommunication
Industry in India, along with Tata Teleservices (Maharashtra) Limited (TTML) and TATA
COMMUNICATIONS LTD. It was founded in the year 2000 and its chairman is Mr. Ratan Tata.
In February this year, TTSL announced that it would provide CDMA mobile services targeted
towards the youth, in a joint venture with Virgin, UK, on a Franchisee model basis.

SCOPE OF THE STUDY

In the present scenario, the telecommunication is lifeblood for every business activities.
Even in this industry there prevails a stiff competition between the service providers. In spite of a
well-established network and infrastructure supporting it certain service providers werent able to
root their footsteps in the market. Further their promotional initiatives havent yielded fruitful
results. Since there is a marginal difference between the services rendered by the Cellular service
providers there is more possibility for the subscriber to switch from one service provider to
another based on his convenience. So it very essential for the Mobile service provider to
understand the customer preferences and the influence of various Demographic variables behind
that influence, the subscribers Pre purchase search and Post purchase behavior to win the hearts
of the customers. This study could aid the service providers with respect to their enhancement.
LIMITATIONS OF THE STUDY
Among the various private Mobile service providers (VODAFONE, AIRCEL, TATA
DOCOMO, RELIANCE, AIRTEL) in Coimbatore OTHERS is selected on the basis of its wide
customer base. Though it could provide an appropriate base for comparing the Private and Public
(BSNL) mobile service providers there is a least probability for this selection not representing
the entire crew of Private players.
The study is with specific to Coimbatore town so the findings landed in this study may
not be applicable in other areas where the customer share of the Mobile service providers could
vary.
The sample size is limited due to the confined period of study. This may also contribute
to the slight deviation in results landed.

OBJECTIVES OF THE STUDY

To study customer satisfaction level of all service providers.
To find out the percentage of prepaid users and post paid users.
To find out the main reasons for shifting from one provider.
To analyze the level of awareness about 3G.
REVIEW OF LITERATURE
Muller (1990) in his a 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. 61,000crores, our present teledensity 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 newly industrialized 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 operation 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 that 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 be
migrated 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) studied 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 Video-Conferencing 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 wire 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) analysed performance of Indian Telecom Industry which is
based on volumes rather than margins. The Indian consumer is extremely price sensitive. 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
instrument 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, and second largest among the emerging economies. It is also the world s 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 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 in African countries like Togo and Cape Verde
have a coverage of 90% while India manages a merely mobile coverage of 20%.
 In overview in Indian infrastructure Report (2005) explains 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 each of which 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)16 identifies 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 is 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)17
the catalyst for Indian mobile operators in the 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)18the 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 that 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)19 explains with support of detailed data that bigger players
are close to 20% of the market each. In CDMA market, it is Reliance Infocom and Tata
Teleservices are dominating the scene whereas Airtel is lead 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 Economic Times (2005)20Indian 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 more than 85000 villages yet is come under teleconnectivity.

According to a paper released by the Associated Chambers of commerce and Industry of

India (2005)21, it is stated that 30% of the new mobile subscribers added by the operators
worldwide will come from India by 2009.10% 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)22 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 next level.
 According to Snyder (2006)23 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. Communications is a human process; humans
communicate by sending information between themselves. Whereas, 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)24 this is one of the first such attempt to
analyse 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)25 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 started .WLAN hot spot have
made inroads along with 3G to offer an alternative form of mobile access.

Uehara (1990); King (1990); Glynn (1992); Mutoh (1994)26 emphasized that
technological changes in the telecom and computers have radically changed the business
scenario. In turn, the new demands of business have spurred 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 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 in the
introduction of rural exchanges designed especially for Indian conditions characterized by dust,
heat and humidity.

According to Economic Commission for Europe (2000)28 this transition of the

telecommunication area is mainly technology driven. The borderline between computers and
electronics, on the one hand, and telecommunications, on the other, is disappearing. This
convergence 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)29 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 technological y
simple SMS based services in Scandinavian 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)30 technologies of mobile

telecommunications and internet are going to set the contours of further technological progress in
the current decade. The most recently initiatives aims 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)31 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.

P.S. Saran (2004)32 the telecom technology in India has transformed from manual and
electro-mechanical systems to the digital systems. India has stepped into 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)33 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.

Moto (1990)34 researched the need of separate policy, regulation and operation which
require changes in legislation - for example the restructuring the Japanese Nippon Telegraph and
Telephone Public Corporation and Kokusai Denshin Dewwa was preceded by appropriate
changes in legal framework.

Melody (1990)35 points out that the Indian Government had not addressed the basic
requirement necessary for reform and there was no pre-planned sequence of structural changes
which are basic determinants of reform. Therefore, the government, investors and subscribes
could expect only marginal benefits from the reform process.

MTNL Report (1991)36 explains that international bodies had supplemented government
resources and funded expansion and technology up gradation programmes.
 Akwule (1992)37 researched that in comparison Kenya, which had almost the same level
of gross domestic investment as percentage of GDP from 1981- 89 raided the telecom investment
as a share of GDP from 3.28% to 8.67 in 1978.The effect of under investment in these sectors
was compounded by the diffusion of these scarce resources over a number of areas where no
specific area in telecom was developed.

Jain and Chhokar (1993)38 points out the limitations of capital and manpower as key
constraints. The Athreyas Committees report may be viewed as an initiation of a process of
examining organizational options. Management incentives which would allow these
organizations to increase profitability and the structural mechanisms which would allow then to
raise capital from markets had been sketchily outlined.

Melody (1990)39 points out various concerns for the telecom sector covering competition
as important one. Competition is considered more important factor than ownership in
introducing efficiency. Further the order in which structural adjustments take place determine the
effectiveness.

Donaldson(1994), Jussawala (1992); Jain, (1995); Wellenius (1995),40 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 global economy.

According to Stephen Y. Walters (2003)41 the telecommunications industry is being

rocked by change fueled by the advent 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 long-distance services.
So, competition and change are not new issues in telecommunications. But the internet has
forced an entirely new set of changes on the phone business. There are new carriers, new
business scenarios, new technologies, and new ways of thinking about end users and the services
they seek.
 Shyamal Ghosh (2003)42 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)43throws light on the factors that contributed to the growth of

telecom sectors. The studies various initiatives take by government in lien of liberalization,
privatization and de-monopolization initiatives. The trend is expected to continue in the segment
as prices are falling as a result of competition in the segments. The beneficiaries of the
competition are the consumers who are given a wide variety of services.

Kushan Mitra (2005)44 analyses various factors contributing to competition to 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) 45 explain that in electronic age, the need to manage customer
relationships for profit is a marketing dilemma that many telecommunication companies face.

Arindham Mukherjee (March, 2006)46 takes out various case studies like Vodafone,
Maxis, Telekopm Malaysia, Tatatele etc. to study the rising interest of foreigners for investment
in Indian telecom industry. Various reasons of stemming growth can be rising subscriber base,
rising teledensity, rising handset requirements, saturated telecom markets of other countries, stiff
competition, requirement of huge capital, high growth curve on telecom, changing regulatory
environment, conducive FDI limits in telecom sector.
 OECD (2007)47 by increasing competition uptake can be mainly realized by then
following incentives ; (1) bundling of services, such as offering telephone line plus broadband
access to internet ADSL at significantly reduced price, introducing triple play services on the
subscriber line and promoting digital T.V. as a revenue source for the fixed line operator. These
would however depend on the distance of the subscriber line from the local exchange and the
quality of the copper line. Reducing cost for the second line would also be effective. This would
lead to reduce prices for the consumer and reduce churn. (2) Increasing competition between
broadband service providers. (3) Reducing the monthly rates of increased speed internet access
using ADSL. (4) increasing awareness of the benefits of ADSL to the society.(5) increasing the
local content on the internet so to attract more users in attempt to find killer application that
would attract user to indispensable ADSL experience.(6) adopting convergence between
wireless or mobile and fixed services.

As Navin (1995)48 points out, these terms have been used to reflect a variety of themes
and perspectives. Some of these themes offer a narrow functional marketing perspective while
others offer a perspective that is broad and somewhat paradigmatic in approach and orientation.
A narrow perspective of customer relationship management is database marketing emphasizing
the promotional aspects of marketing linked to database efforts.

(Bickert, 1992) Another narrow, yet relevant, viewpoint is to consider CRM only as
customer retention in which a variety of after marketing tactics is used for customer bonding or
staying in touch after the sale is made.

(Vavra 1992).50 A more popular approach with recent application of information

technology is to focus on individual or one-to-one relationship with customers that integrate
database knowledge with a long-term customer retention and growth strategy

(Peppers and Rogers, 1993)51. Thus, Shani and Chalasani (1992) define relationship
marketing as an integrated effort to identify, maintain, and build up a 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 long period of time.
 Jackson (1985)52 applies the individual account concept in industrial markets to suggest
CRM to mean, Marketing oriented toward strong lasting relationships with individual
accounts.

McKenna (1991)53 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).

Berry (1995)54, 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)55. Although each of them is

espousing 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 paradigm 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)56, 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 toward establishing,
developing, and maintaining successful relationships.
 The core theme of all CRM and relationship marketing perspectives is its focus on
cooperative and collaborative relationship between the firm and its customers, and/or other
marketing actors. Dwyer, Schurr, and Oh (1987)58 have characterized such cooperative
relationships as being interdependent and long-term oriented rather than being concerned with
short-term discrete transactions. The long-term orientation is often emphasized because it is
believed that marketing actors will not engage in opportunistic behavior if they have a long-term
orientation and that such relationships will be anchored on mutual gains and cooperation
(Ganesan, 1994)59.

Another important facet of CRM is Customer selectivity. As several research studies

have shown not al customers are equally profitable for an individual company (Storbacka,
2000)60. The company therefore must be selective in tailors its program and marketing efforts
by segmenting and selecting appropriate customers for individual marketing programs. In some
cases, it could even lead to outsourcing of some customers so that a company better utilize its
resources on those customers it can serve better and create mutual value. However, the objective
of a company is not to really prune its customer base but to identify appropriate programs and
methods that would be profitable and create value for the firm and the customer.

As observed by Sheth and Parvatiyar (1995)61, developing customer relationships has

historical antecedents going back into the pre-industrial era. Much of it was due to direct
interaction between producers of agricultural products and their consumers. Similarly artisans
often developed customized products for each customer. Such direct interaction led to relational
bonding between the producer and the consumer. It was only after industrial era s mass
production society and the advent of middlemen that there were less frequent interactions
between producers and consumers leading to transactions oriented marketing. The production
and consumption functions got separated leading to marketing functions being performed by the
middlemen. And middlemen are in general oriented towards economic aspects of buying since
the largest cost is often the cost of goods sold.
 Berry and Parsuraman (1991); Bitner (1995); Crosby and Stephens (1987); Crosby,et al.
(1990); Gronroos (1995)62 the de-intermediation process and consequent prevalence of CRM is
also due to the growth of the service economy. Since services are typically produced and
delivered at the same institutions, it minimizes the role of the middlemen. A greater emotional
bond between the service provider and the service users also develops the need for maintaining
and enhancing the relationship. It is therefore not difficult to see that CRM is important for
scholars and practitioners of services marketing.

According to Frazier, Speakman and ONeal (1988)63 another force driving the adoption
of CRM has been the total quality movement. When companies embraced Total Quality
Management (TQM) philosophy to improve quality and reduce costs, it became necessary to
involve suppliers and customers in implementing the program at all levels of the value chain.
This needed close working relationships with customers, suppliers, and other members of the
marketing infrastructure. Thus, several companies formed partnering relationships with suppliers
and customers to practice TQM. Other programs such as Just-in-time (JIT) supply and Material
Resource Planning (MRP) also made the use of interdependent relationships between suppliers
and customers.

According to (Shapiro and Posner, 1979)64 with the advent of the digital technology and
complex products, systems selling approach became common. This approach emphasized the
integration of parts, supplies, and the sale of services along with the individual capital
equipment. Customers liked the idea of systems integration and sellers were able to sell
augmented products and services to goods, as well as services. At the same time some companies
started to insist upon new purchasing approaches such as national contracts and master
purchasing agreements, forcing major vendors to develop key account management programs
Similarly, in the current era of hyper-competition, marketers are forced to be more concerned
with customer retention and loyalty (Dick and Basu, 1994);Reicheld, 1996)65. As several studies
have indicated, retaining customers is less expensive and perhaps a more sustainable competitive
advantage than acquiring new ones. Marketers are realizing that it costs less to retain customers
than to compete for new ones (Rosenberg and Czepiel, 1984)66.On the supply side it pays more
to develop closer relationships with a few suppliers than to develop more vendors (Hayeset al.,
1998; Spekman, 1988).
 In addition, several marketers are also concerned with keeping customers for life, rather
than making a ne0time sale (Cannie and Caplin, 1991)68. There is greater opportunity for cross-
selling and up-selling to a customer who is loyal and committed to the firm and its offerings.
Also, customer expectations have rapidly changed over the last two decades. Fueled by new
technology and growing availability of advanced product features and services, customer
expectations are changing almost on a daily basis. Consumers are less willing to make
compromises or trade-off in product and service quality. In the world of ever changing customer
expectations, cooperative and collaborative relationship with customers seem to be the most
prudent way to keep track of their changing expectations and appropriately influencing it (Sheth
and Sisodia, 1995)69.

According to Yip and Madsen (1996)70 today, many large internationally oriented
companies are trying to become global by integrating their worldwide operations. To achieve this
they are seeking cooperative and col aborative solutions for global operations from their vendors
instead of merely engaging in transactional activities with them. Such customers needs make it
imperative for marketers interested in the business of companies who are global to adopt CRM
programs, particularly global account management programs). Global Account Management
(GAM) is conceptually similar to national account management programs except that they have
to be global in scope and thus they are more complex. Managing customer relationships around
the world cal s for external and internal partnering activities, including partnering across a firms
worldwide organization.

According to David L. Kurtz (2003)71 the purpose of relationship marketing is to build

long-term connections between the company and its customers and to develop brand and firm
loyalty. Relationship marketing works wel for services where transactions tend to be continuous
and switching costs for customers are high. Firms operating in the customization and functional
service quality sector do well with relationship marketing programs. The long-term goal of
relationship marketing is to build brand loyalty. Personal interaction with service personnel is
critical in the development of the long- term relationship.

According Armstrong74, kotler, Cunningham & Mitchell(2004) strategic marketing

planning are documents that outline in detail the marketing strategies which will help a company,
product or brand accomplish its overall business objectives.
 The article published by vargo and lusch (2004)75 in the journal of marketing comes up
with a proactive new dominant logic for the field of marketing. It questions the differences
between the marketing of goods and services. Some of the main arguments made by these
authors are the following;

1. Material goods are only distribution mechanisms for service distribution.

2. Knowledge is the fundamental source of competetive advantage.

3. All economies are service economies.

4. The customer is always a co-producer.

According to Nagasimha kanagal (2006)76, relationships as a focus on marketing aids in

the understanding of consumer needs and wants, which is useful to implement profitable
exchanges. Relationship marketing helps customising 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 a tool of furthering the customer understanding and interactive processes. Relationship
marketing outputs can thus be usefully 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.

Author such as stanton,etzel & walker (1991;13)77, McCartly & Perrearelt (1993;46) and
Kotler & armstrong (1997;52) agree that the traditional marketing mix has been defined as a set
of controllable instruments to manage the uncontrollable and dynamic marketing environment
and consist of four major element price, product, promotion or marketing communication and
place.

According to Donath (1999;14)78 there is an overemphasis on price and product as

marketing instruments and an underemphasis 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;87).
 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)80.

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).81

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 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).

Kalavani (2006)83 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 customers attitude towards cell phone services is that they are satisfied with
the existing services but still they want more services to be provided.

Seth et al (2008)84, 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 importance
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)85 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.
 Rick (2008)86: in his study found that companies with sound customer strategies can use
that ultimate loyalty program as a differentiator in an increasingly muddled market. In an
increasingly competitive market, customer loyalty efforts can play a major part in the attraction
of new customers and the retention of current ones. As consumers' choices expand, the
importance of a sound customer relationship strategy becomes more and more important for the
success of the company.

Shikha Ojha (2009)87 conducted a study on Consumer Awareness of VAS of Telecom

Sector of India. She analyzed the contribution of the mobile phone services not only at the
national or state level, but also its involvement in an individual's life. She found out that the less
number of users are aware of all the VAS provided by the service providers and thus the
companies should focus on the awareness campaign.

Shirshendu Ganguli (2008)88 conducted a study on Drivers of Customer Satisfaction in

Indian Cellular services Market in which he discussed the impact of service quality and features
on customer satisfaction from the cellular users viewpoint.

J D Power(2009)89 conducted a study on Customers increasingly want telecom services

and products to be bundled based on responses collected from 11,911 customers nationwide
and examined the overall customer satisfaction on six factors customer service, reliability,
billing, image, cost of service, offers & promotions.

Girish Taneja & Neeraj Kaushik (2007)90 conducted a study on Customers perception
towards Mobile service providers: An analytical study aims to deduce the factors that customers
perceive to be the most important while utilizing the services of a mobile service provider.

Anita Seth (2007)91 in his study on Quality of service parameters in cellular mobile
communication developed a model of service quality and a set of dimensions for comparative
evaluation which could provide useful directions to regulators and service providers.
 Swadeshkumar Samanta (2007)92 did as study on impact of price on mobile subscription
and revenue access price or fixed monthly fee for mobile services is the major factor that
governs the percentage of people subscribing ( penetration ) to the services. Empirical analysis
shows a strong correlation between access price and penetration for developing and developed
countries. They demonstrate a tradeoff between price of access and per minute call and show
how subscription and revenue to the operator can be increased.

Wilska (2003)93 according to survey of finish young people aged 16-20, it was found
that mobile phones choice and especially usage is consistent with respondents general
consumption styles. The researcher showed that addictive use was common among females and
was related to trendy and impulsive consumption styles. Instead, males were found to have more
technology enthusiasm and trend consciousness. These attributes were then linked to impulsive
consumption. the study concluded that genders are becoming more alike in telecom service
choice. Because individual differences in consumption patterns are obviously identifiable.

Requelme(2001)94 examined how much self knowledge consumers have when choosing
between different telecom service brands. The study was built upon six key attributes ( service
features, connection fee, access cost, cell to cell phone rates, call rates and free calls )related to
mobile. The research showed that consumers with prior experience about a product can predict
their choices relatively well , although respondents tended to overestimate the importance of
features, call rates and free calls and underestimate the importance of a monthly access fee ,
mobile to mobile phones rates and the connection fee. Mobile phone choice and use has also
been found to be related to prior consumption style.

Leonard L. Berry and A. Parasuraman (1991)95 showed that inspired leadership, a

customer-minded corporate culture, excellent service-system design and efficient use of
information and technology are crucial for achieving superior service quality and service
marketing. They argued that superior quality is vital to sustaining success. They insisted that
customer satisfaction through integration of service quality throughout the system must be the
focus of any company.
 Ruth M. Bolton and James H. Drew (1991)96, developed a model of how customers with
prior experiences and expectations assess service performance levels, overall service quality, and
service value. The model was applied to residential customers' assessments of local telephone
service. The model was estimated with a two-stage least squares procedure through survey data.
Results indicated that residential customers' assessments of quality and value are primarily a
function of disconfirmation arising from discrepancies between anticipated and perceived
performance levels. However, perceived performance levels also were found to have an
important direct effect on quality and value assessments.

Kenneth Teas (1993)97 examined conceptual and operational issues associated with the
"perceptions minus-expectations" (P-E) perceived service quality model. The examination
indicated that the P-E framework was of questionable validity because of a number of
conceptual and definitional problems involving the (1) conceptual definition of expectations, (2)
theoretical justification of the expectations component of the P-E framework, and (3)
measurement validity of the expectation (E) and revised expectation (E*) measures specified in
the published service quality literature. Consequently, alternative perceived quality models that
address the problems of the traditional framework were developed and empirically tested.

Pratibha A. Dabholkar (1993)98 iterated that customer satisfaction and service quality are
both important tools for creating competitive advantage. However, there is a lack of consensus
on whether the two are separate constructs and how they should be measured. The research
presented a number of conceptualizations of customer satisfaction and service quality based on
disconfirmation, a transactional versus global view and the inclusion of cognitive and/or
affective factors. Possible antecedents and consequences of both constructs were examined, and
suggestions for future conceptualization and measurement of the constructs were provided.

Eugene W. Anderson (1996) investigated the association between customer satisfaction

and willingness-to-pay or price tolerance. The goal was not only to determine whether the
association between customer satisfaction and price tolerance is positive or negative but also to
gauge the degree of association. The empirical analysis indicated a negative association between
the level of customer satisfaction provided by the firm and the degree of price tolerance
exhibited by its customers. However, a positive association was found between year-to-year
changes in the levels of customer satisfaction and price tolerance.
 Stephen S. Tax et al. (1998)99 said that many companies are considering investments in
complaint handling as means of increasing customer commitment and building customer loyalty.
Firms are not well informed, however, on how to deal successfully with service failures or the
impact of complaint handling strategies. The results of the paper supported a quasi brand
equity perspective-whereas satisfaction with complaint handling had a direct impact on trust
and commitment, to a limited extent, on the effects of poor complaint handling. Implications for
managers and scholars were also discussed.

Bepko (2000)100 says that among the areas which need to be addressed in service quality
research is the nature of consumer expectations across the range of intangibility. Previous
research had compared consumers service quality expectations across services, but different
groups of subjects were evaluated for each different service. The problem with using different
subjects for each service is that the subjects demographic characteristics may be responsible for
the significant differences in expectations of quality. The paper used a controlled, repeated
measures design where subjects were each asked to evaluate three services, varying in their
degree of intangibility, over a ten week period.

David M. Szymanski and David H. Henard (2001)101 said that the growing number of
academic studies on customer satisfaction and the mixed findings they report complicate efforts
among managers and academics to identify the antecedents to, and outcomes of, businesses
having more versus less- satisfied customers. These mixed findings and the growing emphasis by
managers on having satisfied customers point to the value of empirically synthesizing the
evidence on customer satisfaction to assess current knowledge. To this end, the authors
conducted a meta-analysis of the reported findings on customer satisfaction. They documented
that equity and disconfirmation are most strongly related to customer satisfaction on average.
They also found that measurement and method factors that characterize the research often
moderated relationship strength between satisfaction and its antecedents and outcomes. The
authors discussed the implications surrounding these effects and offered several directions for
future research.
 Carsten Fink et al. (2001)102 examined the liberalization of the basic
telecommunications sector in Asian countries in their research paper for World Bank,with a view
to identify the elements of good policy and examine how it can be promoted through multilateral
negotiations. They found that despite the move away from traditional public monopolies, most
Asian governments are still unwilling to allow unrestricted entry, eliminate limits on private and
foreign ownership, and establish strong independent regulators. Where comprehensive reform
including privatization, competition and regulation has been implemented, there are
significantly higher levels of main line availability, service quality and labor productivity.

Maran et al. (2004)103 studied the consumer perceptions about fixed telephone lines in
Chennai. The objectives of the study was

(1) to find the most influencing factor in selection of service provider, and

(2) to measure customer perception and satisfaction as regards the service provided.

The study on a sample of 550 telephone users indicated that some problems exist that
deserve the attention of the company. The company needs to bridge the gap between the services
promised and services offered. And to conclude, Delivering service without measuring the
impact on the customer is like driving a car without a windshield.

Shanthi (2005)104 throws light on the telecommunications market of India post

privatization. In the scenario of falling prices, hyper-competition and increasing attrition rates
and the author says that the study aims to bridge the research gaps identified as above.