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Strategic Framework for Marketing of Telecom
Services with specific reference to IP Telephony in India
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By Aditya Krishna Nanda, Dr. Deepali Singh & Prof.DP Agrawal 1. Dr. Deepali Singh, Astt. Professor Indian Institute of Information Technology & Management E-mail: deepalipsingh@hotmail.com 2. D. P. Agrawal, Director Indian Institute of Information Technology & Management Prof_dpa@hotmail.com 3. Aditya K. Nanda,
Manager, TCS Web: YOUR WEB SITE BRIEF BIOGRAPHICAL DESCRIPTION |
Abstract
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In the cellular sector alone, the subscriber base has increased
nearly 10 times over the past three years while the tariff has been reduced by
nearly 90 percent over the same period. Similarly, tariffs have come down in
long distance international and national telephony by about 40% to 60%.
Internet telephony is offered even at cheaper rates. This
framework, which has been specifically designed for the IP Telephony market |
SUBHEADING
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Internet telephony is rapidly changing the dynamics of the of the
telecommunication industry world over. By 2004 this could account for up to
40% of all international traffic. Because these calls are mainly carried out
outside the PSTN they are also outside the regulatory and financial
structures that have grown up. THE IP
TELEPHONY SOLUTION FOR In the cellular sector alone, the subscriber base has increased
nearly 10 times over the past three years while the tariff has been reduced
by nearly 90 percent over the same period. Similarly, tariffs have come down
in long distance international and national telephony by about 40% to 60%.
Internet telephony is offered even at cheaper rates. This framework, which has been
specifically designed for the IP Telephony market The frame works in five levels.
Every level is handling different issues of the IP Telephony market. With in
each level we have different issues and options, which a marketer has to look
into before going in for a business or a marketing strategy. The options and
issues discussed in the framework represent the dynamics of the market. The
different Levels are:
·
LEVEL II: DETERMINANTS OF SUCESS
ASSUMPTIONS
The key assumptions taken for
the designing of the strategy are:
LEVEL I: Delivery System Mode. At this level the framework
discusses the mode by which the services would be delivered to the customer.
These are the touch points where the customer ultimately interacts with the
service providers. The mode also explain the ways of:
LEVEL II: Determinants of Success. There are always some
determinants, which are critical for the success of the services. In case of
the IP Telephony market there are nine success parameters, which have been
considered. They are:
In 1994 Jeffrey K. MacKie-Mason
and Hal R. Varian (Jeffrey K. MacKie-Mason and Hal R. Varian, MIT 1995) proposed
that much of the time the network is uncontested; at such times the price for
usage should be zero. However, when the network is congested, the packets
should be prioritized based on the value that the user puts on getting the
packet through quickly. David D. Clark (David
D. Clark, MIT 1995) also discusses a scheme where bandwidth is allocated
among users by creating different service classes of different priorities to
serve users with different needs. One
simple pricing model given by Andrew Sears (Andrew Sears, MIT 1995) would be for ISP’s to price their voice
access similarly to their data access. While this may not be how they chose
to price, it does provide a range in which they could price profitably
assuming that data access is currently priced profitably. Using cost analysis, for each voice call,
the ISP’s could earn twice the profit as from a data call by pricing voice
services at twice price of their data services (twice the price because it's
two way traffic for voice) plus the local dial out costs
LEVEL III: Market segmentation. Now that the determinants of
success of the service provider in the IP Telephony market, have been identified
and based on the present telecommunication market following four market
segments are identified:
SEGEMENT I:
RETAIL
In the retail market, the
competition is likely to be fierce because the only service provided is a
plain vanilla service and, therefore, there is very little differentiation,
which is possible. So the competition would be around price and value added
services. The issues critical to this
segment are:
SEGEMENT II:
CORPORATE
Corporate segment is the premium segment of this market.
This is the segment from where high volumes of profits are always expected.
Entry barriers in this market are very high. This is also because a good
track record is essential to get business from corporates. The issues critical to this segment are:
SEGEMENT III:
WHOLESALE
In this segment the service
provider can target those ITSPs, which do not have
their own infrastructure or are short of infrastructure. This segment holds
high potential, as this IP Telephony market is attracting large number of
small operators, who are in need of established infrastructure in order to
compete. The critical issues involved in
this segment are:
SEGEMENT IV:
VILLAGE IP TELEPHONES
There is a growing demand for
basic voice services in The critical issues involved in
this segment are:
LEVEL IV: Business Strategy. Considering the Indian
telecommunication market and the opportunities that have evolved due to
Internet telephony, the service provider could employ the following three
business strategies: STRATEGY
I: INDEPENDENT ITSP AT ONE END, HIRING
INFRASTRUCTURE AND COLLABORATING WITH ITSP AT OTHER END There
are many ISPs, which are providing their services by hiring infrastructure or
bandwidth and do not have their own gateway; they provide these services by
collaborating with other ITSPs. Usually they
collaborate in two ways one in getting the services from the ITSPs who are acting as whole sellers of the services, or
secondly collaborating with the ITSP at the destination, where the call is
ending. If Phone-to-Phone IP Telephony
is legalized in Moreover when the service
provider is providing the service in collaboration with an ITSP at the other
end he has little control on his capabilities and in this case QoS. Similarly if we see on the price front these
operators have to collaborate at each level of their operation, this
restricts their movements in the regions of service and price to customer.
Usually the service basket including the value added services largely depend
upon the capabilities of their partners. So it is very important for the
organization to collaborate with those service providers which it thinks can
meet its demands for today and for the future. THE SERVICE
MODEL
STRATEGY II: ITSP
HAVING IT’S OWN INFRASTRUCTURE, HANDELING CALLS AT BOTH ENDS (i.e. AT ORIGIN
& DESTINATION) Under this Internet telephony scenario the ITSP is a complete
service provide at home, he has his own bandwidth, his own gateways and
supporting infrastructure and at the same time he is also receiving the calls
at the destination. Generally these capabilities lie in the service providers
of category ‘A’ as per Indian scenario. When evaluating this strategy it was seen that these type
of business strategy involves large initial investments. As the organization
has to go for the complete infrastructure, its own backbone, its own gateways
this involves high investments at both the initiation and destination points. The coverage largely depends upon the incoming and
outgoing traffic of calls between two destinations, the extent of investments
to be made and the government regulation and policies of that region. Most of
their functions of the service provider depend on these factors. Thus they
have very limited coverage, largely in those regions where there is high call
traffic friendly government regulations. THE
SERVICE MODEL Fig 4.3 Service Model Strategy II
STRATEGY
III: INCUMBENTS PROVIDING THE SERVICES
AS A PART OF THEIR PRODUCT BASKET This is the category of the incumbents present in the in
the telecom market, which are acting as a complete telecom operators in the
market. They have the infrastructure, they are the basic telecom operators,
they are the international long distance operators and they are the broadband
Internet providers. At the same time these operators have a nationwide
presence, they have a huge customer base and are technologically robust. This
business strategy covers the issues when these telecom giants of the industry
enter the IP Telephony market.
LEVEL V: Government Policies And Regulations. The rapid development of the Internet has, in large, been
due to this lack of regulatory intervention. The introduction of regulation
would almost certainly retard innovation.
in the Internet, and those that stand to gain from regulation are, in
general, operators that have enjoyed a monopoly position for many years. Because most Internet services have been classified as
non-basic or non-voice services, providers have not been subject to
restrictive licensing and market entry requirements that apply to other
telecommunications providers. As VoIP begins to
compete with traditional telephony, regulators may start to impose
registration, licensing, or other requirements on ITSPs.
These processes may be time-consuming, and may involve franchise fees or
royalty payments, which would significantly disadvantage new entrants. If ITSPs are classified as
carriers of basic voice services, they may be required to comply with routing
restrictions and rules. These may restrict services that bypass accounting
systems. However, given the complex topology of the Internet, it would be
virtually impossible to monitor individual packets and apply routing rules on
them. CONCLUSION The health of a telecom industry can be judged by the
nature of competition and the regulatory liberalization that, that industry
holds. It has been seen that for the best interest of the telecom industry
the regulatory framework should incorporate the liberalness and the unbiased
element in its policies. The competition decides the market structure. With
every step in the lifecycle of the service provider, he moves up the value
chain, each and every step he takes changes the competitive landscape of the
industry. But, as this industry is technology driven any change in the
technology landscape will affect the dynamics of the market. Today when the technology enables the convergence of
voice, data and media, and the telecom market is driven by the convergence of
services, its important for the service providers to take another step. The
one who effectively handles the issues of integration of voice, data and
media will emerge as winner. The player who dis-intermediates
the value chain and is the complete service provider from end to end. Either
a single player achieves this or there is an alliance of players to achieve
it. The business models of tomorrow will be based on this integration as
their core. The service provider of tomorrow has to be the complete service
provider, these in terms of services, in terms of infrastructure, or may be
in terms of coverage. REFERENCES
MAGAZINES
NEWS PAPERS
WEB RESOURCES
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