CHAPTER – 1

INTRODUCTION

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 INTRODUCTION

TELECOMMUNICATION:

Telecommunication is the communication of the information over a distance.

The term comes from a contraction of the Greek Tele , meaning ‘far’ and
communication meaning ‘the discipline that studies the principle of
transmitting information and the methods by which it is delivered ( as print or
radio or television etc.)’ the world becomes more and more reliant on
telecommunication technologies for commerce, communication and access to
information.

INDIAN TELECOM INDUSTRY:

The Indian telecommunication industry has experienced high growth in recent

years. The telecom regulatory authority or India or TRAI (establish in the year
1997) is the independent regulator establish by the government of India to
regulate the telecommunication business in India, to lay down the standards,
and to issue telecom tariff orders.

REGULATORY FRAMEWORK:

The government has liberalized the telecommunication service sector and

opened it for private participation. The regulatory norms for certain
communication services are as follows:

 Mobile service: four licenses have been awarded in each of 22 telecom circle.
Three licenses have been awarded to private service provider and one to the
government operator. The private licenses have been issued based on a bidding
process.
 Fixed lines services: there is no restriction on the number of player in the fixed
line segment. The licenses have been awarded based on a fixed entry fees, issued
on a non exclusive basis for a period of 10 years, extendable by 10 years at a time.
 Internet service: there is no restriction on the number of player in the ISP segment.
 Ministry of communication and information technology are as follows:
 Telecom commission
 DOT
 TRAI
 TDSAT
 WPC

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FACTOR RESPONSIBLE FOR THE GROWTH OF
TELECOMMUNICATION INDUSTRY

The Indian telecommunication is under penetrated and hence and offers

tremendous growth potential. Innovation was the key factor for the revenues of
the telecom industry in the western countries. Today, however, new wireless
applications, low-cost manufacturing innovations, and handset design are some
of the areas in which the Asian countries are out-investing the United States
and are seen resulting bottom-line impacts to their economies (National
Research Council, 2006). In emerging markets, factors such as customer
service, regulations and policies are some of the main factors that are shaping
the industry.

After the inception in India, over a period of 200 years, telecommunication has
indeed grown by leaps and bounds to occupy an important position in the
Indian economy today. Buoyed by the rapid surge in the subscriber base, huge
investments are being made into this industry. There were around 200 million
telephone lines in India which makes it the 3rd largest phone network in the
world after china, and the US. Today, the telecom market in India enjoys the
highest growth rate in the whole world. The improvement in the standard of
living and the development of infrastructure and connectivity are some of the
main reasons for the significant growth of the telecom industry. In order to
capitalise the opportunity of meeting the subscriber needs in highly competitive
market the operators have reduced the tariffs to attract subscribers with low
purchasing power primarily in semi urban and rural India. Through the
changing regulations and events, the Industry players are aiming to achieve
acquiring new subscriber by expanding in semi urban and rural India, and
selling more services to existing subscribers. Several steps were taken to
improve the tele-density in the country. Targets of additional DSLs were
enhanced. Intensive efforts are being made to cover more villages through
VPTs. Private sector is being encouraged to provide telecom facilities at a
faster pace. The progress made was reviewed by the Minister of
Communication during the meeting held with circle heads and heads of SSA

 The 5G and IOT impact:

Companies like Ericsson and Nokia are in talks with telecom operators to help
them check the feasibility of setting up 5G in India. With the Indian
government also making a push for smart cities, IoT also comes into the play.

The investment in this sector will have to be for the hardware, infrastructure
and software platforms as well as applications and network connectivity. Cloud
storage and data analytics are another part of the ecosystem. There are also
many other factors that need to be considered like regulations, security, data
privacy and standards for connectivity.

While the challenges are many, India looks set to grow and move into a
formidable position in the telecom industry and its growth. This is due to the

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vast nature of our country, the penetration level that can be made possible, and
the massive demand for alternative services through the telecom ecosystem.

The Challenges:

The kind of growth that is set to happen in the Indian Telecom industry poses a
challenge. The infrastructure needs to scale up for 5G. Also, there is a highly
competitive trend in the market to retain or woo customers. It will require an
excellent balancing act by the Telecom service providers to ensure reach,
quality services as well as affordability. This could mean that these companies
would have to invest in these facilities while being forced to adopt innovative
approaches for providing services.

Also, there is the question of providing value to customers. This would depend
a lot on how these companies tie up with other service providers to offer
services like m-Health or m-Payments. The idea of using your mobile device as
a safe and secure device using which payments can be made is essential.

This is what has driven services like Vodafone m-Pesa; Airtel Money and
these can also drive alternate revenue generation options for them. In other
words, companies are exploring non-core functions to garner revenue. There is
much disruption happening in the market, and this has also led to a
consolidation of sorts.

The Indian Context:

India has a huge role in the Telecom Industry growth. After all, it has more
than a billion mobile subscribers and also the second largest Internet user base.

In India, social networking, digital payments, and online shopping have caught
on like wildfire. With the Government’s push for Digital India, many service
providers are rolling out services in health, financial services, education, and
entertainment. For example, people are subscribing to music streaming or
learning facilities. M-Payments are driven by the government’s push for
cashless India using internet which is provided by telecom operators.

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INDIAN CELLULAR MARKET
The rise of Jio has been the standout story in India's mobile market in recent
years. . Jio continues to increase its 4G Availability, with the highest national
score we have ever recorded — an outstanding achievement when you consider
the challenges India's operators face and the speed at which the market is
maturing. But Jio's rivals haven't been complacent. We've seen some
impressive growth across all of our metrics, with Airtel's download speed
increases worthy of particular mention. And we expect to see this growth
continue as the Indian mobile market matures.

The merger of Vodafone and Idea Cellular is set to create India's biggest
operator, with some 387 million subscribers across the country and plans
to extend its 4G network to over 80% of Indian users. Vodafone and Idea are
currently still operating as separate consumer brands, so in this report we will
treat them as individual operators. But the combination of the two giants means
the Indian mobile market will soon be paired down to four major national
mobile operators. There are now hopes this will ease the fierce round of
mergers and acquisitions in the market, helping to ease the ferocious price war
in the country.

India's remaining operators are now seeking other ways to differentiate their
services rather than continually undercutting each other. The focus is already
shifting further towards service quality, with both Airtel and Vodafone
Idea talking up their 4G network improvement plans, while Jio has gone one
step further with a pledge to bring 5G to India before its rivals. And as mobile
Video Experience gradually improves, many operators are now forging content
deals to attract subscribers and drive data use. High levels of competition have
put a lot of price pressure on India's operators. But this should now abate —
and relatively low levels of smartphone penetration and a vast customer base
mean there is still a fair bit of room for organic growth.

How realistic is 5G in India in 2020, though? India's regulator is planning to

auction airwaves for 5G use this year, while the country is set to get its first
5G-enabled phone before the end of 2019. But both Airtel and Vodafone Idea
are lobbying for a delay in the auction to allow them more time to upgrade
existing networks to 4G and raise cash, while Vodafone is objecting to plans
for an operator spectrum cap.

A recent report from Deloitte has estimated that the total investment required to

cover India with 5G would be a staggering $70 billion — partly because the
country lacks widespread fibre backhaul infrastructure necessary for high-
capacity networks. It's possible that India will see consumer 5G next year. But
initial launches are likely to be limited to key urban areas, while the high cost
of 5G devices is likely to make them prohibitive for the majority of Indians.
There is no doubt that 5G is coming — however, the average consumer on the
subcontinent is unlikely to feel the widespread benefits of the new technology
for some years yet.

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Wireless subscribers in India:
As of December 2018, there were over 1.1 billion mobile wireless subscribers
in India. Some of the biggest mobile telecom companies in India include
Bharti, Vodafone, and Idea, who have over 600 million Indian subscribers
combined. Bharti is the overall market leader in the wireless subscriber market
with a 23.65 percent share. In comparison, Vodafone has an 17.86 percent
share and Idea has a 16.54 percent share. BSNL, the market leader in the Indian
wireline segment, has just a 8.78 percent share in the wireless subscriber
market.

Bharti Airtel Limited is headquartered in New Delhi and operates in 20

countries across South Asia, Africa, and the Channel Islands. It is the world’s
third largest mobile telecommunications company, with over 275 million
subscribers. As well as being the market leader for mobile telecoms in India, it
also has the most wireless subscribers in the country with some 23 million
customers as of July 2014. Vodafone, Bharti’s closest rival, had 18.64 million
customers in the same month.

Vodafone was the second largest mobile telecom provider in India with over
212 million subscribers as of June 2017. It is also the world’s second largest
mobile telecommunications company measured by both subscribers and 2013
revenues, and had over 434 million global subscribers in March 2014. India is
by far Vodafone’s biggest market in terms of subscribers with over 100 million
more subscribers in the country than in its second largest market, South Africa,
which has 65 million subscribers. As a result, almost 18 percent of Vodafone
employees were located in India in 2013, in comparison to the 16 percent who
work in the United Kingdom, where the company is headquartered. In 2014,
the company announced worldwide revenue of over 38 billion pounds.

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COMPANY PROFILE: BSNL
Bharat Sanchar Nigam Limited, BSNL is an Indian state-owned
telecommunications company, headquartered in New Delhi, Delhi, India. It
was incorporated by Government of India on 1 October 2000. It provides
mobile voice and internet services through its nationwide telecommunications
network across India. It is the largest wire line telecommunications network
company in India with more than 60% market share and fourth largest wireless
telecommunications Operator. The BSNL is India's oldest and largest
communication service provider (CSP). It had a customer base of 95 million as
of June 2011. It has footprints throughout India except for the metropolitan
cities of Mumbai and New Delhi, which are managed by Mahanagar Telephone
Nigam (MTNL).

History:

The BSNL then known as the Department of Telecommunications had been a

near monopoly during the socialist period of the Indian economy. During this
period, DOT was the only telecom service provider in the country. MTNL was
present only in Mumbai and New Delhi. During this period the DOT operated
as a typical state-run organization, inefficient, slow, bureaucratic, and heavily
unionised. As a result subscribers had to wait for as long as five years to get a
telephone connection the corporation tasted competition for the first time after
the liberalisation of Indian economy in 1991. Faced with stiff competition from
the private telecom service providers, it has subsequently tried to increase
efficiencies itself. The Dot veterans, however, put the onus for the sorry state
of affairs on the Government policies, wherein all stateowned service providers
were required to function as mediums for achieving egalitarian growth across
all segments of the society. The Dot, however, failed to achieve this and India
languished among the most poorly connected countries in the world. So, the
BSNL was born in 2000 after the corporatisation of Dot. The corporatisation of
BSNL was undertaken by an external international consulting team consisting
of a consortium of A.F.Ferguson & Co, JB Dadachanji and NM Rothschild -
and was probably the most complex corporatization exercise of its kind ever
attempted anywhere because of the quantum of assets (said to be worth USD
50 Billion in terms of breakup value) and over half a million directly and
indirectly employed staff. Satish Mehta, who led the team later, confessed that
one big mistake made by the consortium was to recommend the continuation of
the state and circle based geographical units which may have killed the
synergies across regions and may have actually made the organisation less
efficient than had it been a seamless national organisation. Vinod Vaish, then
Chairman of the Telecom Commission made a very bold decision to promote
younger talent from within the organisation to take up a leadership role and
promoted the older leaders to a role in licensing rather than in managing the
operations of BSNL. The efficiency of the company has since improved;
however, the performance level is nowhere near the private players.

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Services
The BSNL provides almost every telecom service in India. Following are the
main telecom services provided by The BSNL:

 Universal Telecom Services : Fixed wireline services and landline in local

loop (WLL) using CDMA Technology called 'b fone' and Tarang respectively. As
of June 30, 2010, BSNL had 75% market share of fixed lines.

 Cellular Mobile Telephone Services: The BSNL is major provider of

Cellular Mobile Telephone services using GSM platform under the brand name
Cell one & Excel (BSNL Mobile).

 WLL-CDMA Telephone Services: BSNL's WLL (Wireless in Local

Loop) service is a service giving both fixed line telephony & Mobile telephony.

 Internet: The BSNL provides Internet access services through dial-up

connection (as Sancharnet through 2009) as Prepaid, Net One as Postpaid and
ADSL broadband as BSNL Broadband BSNL held 55.76% of the market share
with reported subscriber base of 9.19 million Internet subscribers with 7.79% of
growth at the end of March 2010. Top 12 Dial-up Service providers, based on the
subscriber base, It Also Provides Online Games via its Games on Demand
(GOD).

 3G: The BSNL offers the '3G' or the'3rd Generation' services which includes
facilities like video calling, mobile broadband, live TV, 3G Video portal,
streaming services like online full length movies and video on demand etc.

 IPTV: The BSNL also offers the 'Internet Protocol Television' facility which
enables watch television through internet.

 FTTH: Fibre To The Home facility that offers a higher bandwidth for data
transfer. This idea was proposed on post-December 2009.

 VVoIP: The BSNL, along with Say Info system - an Information and
Communication Technologies (ICTs) provider - has launched Voice and Video
Over Internet Protocol (VVoIP). This will allow to make audio as well as video
calls to any landline, mobile, or IP phone anywhere in the world, provided that
the requisite video phone equipment is available at both ends.

 WiMax: The BSNL has introduced India's first 4th Generation High-Speed
Wireless Broadband Access Technology with the minimum speed of 256kbit/s.
The focus of this service is mainly rural customer where the wired broadband
facility is not available.

Quality of Service

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 The BSNL goes by the motto "Connecting India, faster" and displays the same
at their homepage. The service quality of BSNL Customer service has been
severely criticized as very poor. The mobile services provided by BSNL in
almost every part of the country were and still are criticized for network
outages and frequent call drops. Despite the criticism there is very negligible or
no amount of work being carried outby the authorities to improve the
performance and quality of the network. BSNL claims to offer seamless
coverage in almost all forests of India in collaboration with state forest
department.

India is currently the world’s second-largest telecommunications market with a

subscriber base of 1.20 billion and has registered strong growth in the past
decade and half. The Indian mobile economy is growing rapidly and will
contribute substantially to India’s Gross Domestic Product (GDP), according to
report prepared by GSM Association (GSMA) in collaboration with the Boston
Consulting Group (BCG). As of January 2019, India has witnessed a 165 per
cent growth in app downloads in the past two years. 4.8 billion downloads of
mobile applications were registered in India in first three months of 2019.The
liberal and reformist policies of the Government of India have been
instrumental along with strong consumer demand in the rapid growth in the
Indian telecom sector. The government has enabled easy market access to
telecom equipment and a fair and proactive regulatory framework that has
ensured availability of telecom services to consumer at affordable prices. The
deregulation of Foreign Direct Investment (FDI) norms has made the sector
one of the fastest growing and a top five employment opportunity generator in
the country.

Market Size:

India ranks as the world’s second largest market in terms of total internet users.
The number of internet subscribers in the country increased at a CAGR of
45.74 per cent during FY06-FY19 to reach 636.73 million in 2018-19. Total
wireless data usage in India grew 119.00 per cent year-on-year to 17,940,576
terabytes between April-June 2019. The internet subscribers reached 665.31
million till June 2019.Further, India is also the world’s second largest
telecommunications market, total telephone subscriber base and tele-density
reached 1,195.24 million and 90.52 per cent, respectively, at the end of
September 2019.Gross revenue of the telecom sector stood at Rs 61,535 crore
(US$ 8.93 billion) during April-June 2019.Over the next five years, rise in
mobile-phone penetration and decline in data costs will add 500 million new
internet users in India, creating opportunities for new businesses.

Investment/Major development:

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With daily increasing subscriber base, there have been a lot of investments and
developments in the sector. FDI inflows into the telecom sector during April 2000 – June
2019 totalled to US$ 37.05 billion, according to the data released by Department for
Promotion of Industry and Internal Trade (DPIIT).
Some of the developments in the recent past are:
 As per report by Ericsson, India has the world’s highest data usage per
smartphone at an average of 9.8GB per month.
 As of August 2019, Jio's IoT platform is ready to be commercially available from
January 2020.
In August 2019, commercially launched Jio GigaFiber as wired broadband service.
 During the first quarter of 2018, India became the world’s fastest-growing market
for mobile applications. The country remained as the world’s fastest growing
market for Google Play downloads in the second and third quarter of
2018.               

 Bharti Airtel is planning to launch 6,000 new sites and 2,000 km of optical
fiber in Gujarat in 2018-19.
 Vodafone India and Idea Cellular have merged into ‘Vodafone Idea’ to
become India’s largest telecom company, as of September

Government Initiatives:

The government has fast-tracked reforms in the telecom sector and continues to be
proactive in providing room for growth for telecom companies. Some of the other major
initiatives taken by the government are as follows:
 The Government of India is soon going to come out with a new National Telecom
Policy 2018 in lieu of rapid technological advancement in the sector over the past
few years. The policy has envisaged attracting investments worth US$ 100 billion
in the sector by 2022.
 The Department of Information Technology intends to set up over 1 million
internet-enabled common service centres across India as per the National e-
Governance Plan.
 FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent;
out of 100 per cent, 49 per cent will be done through automatic route and the rest
will be done through the FIPB approval route.
 FDI of up to 100 per cent is permitted for infrastructure providers offering dark
fibre, electronic mail and voice mail.
 The Government of India has introduced Digital India programme under which all
the sectors such as healthcare, retail, etc. will be connected through internet

Achievements:

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 Following are the achievements of the government in the past four years:

 Department of Telecommunication launched ‘Tarang Sanchar’ - a web portal

sharing information on mobile towers and EMF Emission Compliances.
 Value of Unified Payments Interface (UPI) transactions crossed 1 billion-mark
and witnessed transaction value of Rs 1.91 lakh crore (US$ 27.33 billion) in
October 2019.
 As of July 2019, India achieved 100 per cent digitisation of cable TV network.
 Six-fold increase in Government spending on telecommunications infrastructure
and services in the country – from Rs 9,900 crores (US$ 1.41 billion) during
2009-14 to Rs 60,000 crores (US$ 8.55 billion) (actual + planned) during 2014-
19.
 Over 75 per cent increase in internet coverage – from 251 million users to 446
million
 Country-wide Optical Fibre Cable (OFC) coverage doubled – from 700,000 km to
1.4 million km

Road Ahead:

Revenues from the telecom equipment sector are expected to grow to US$ 26.38 billion
by 2020. The number of internet subscribers in the country is expected to double by 2021
to 829 million and overall IP traffic is expected to grow 4-fold at a CAGR of 30 per cent
by 2021. The Indian Government is planning to develop 100 smart city projects, where
IoT would play a vital role in development of those cities. The National Digital
Communications Policy 2018 has envisaged attracting investments worth US$ 100 billion
in the telecommunications sector by 2022. The Indian Mobile Value-Added Services
(MVAS) industry is expected to grow at a CAGR of 18.3 per cent during the forecast
period 2015–2020 and reach US$ 23.8 billion by 2020. App downloads in India are
expected to increase to 18.11 billion in 2018F and 37.21 billion in 2022F.

Present scenario of BSNL

After facing cash crunch for some months, state-run Bharat Sanchar Nigam
Limited (BSNL) is expecting normalcy in cash flows in the second quarter
(July-September) of FY20, according to the BSNL Director (Finance) who
blamed the "predatory pricing" for the current crisis in the sector and in the
BSNL.
"The liquidity position of the company may start improving and normalcy
could be restored in the next quarter," S K Gupta, BSNL Director (Finance),

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has stated in a 16 May letter to the chief general managers and financial
advisors of all its telecom circle heads and district maintenance regions.
"This position may be conveyed to all the stakeholders of BSNL," the letter
read.
BSNL faced tough time in the fourth quarter (Q4) of FY19 when it failed to
clear its wage bill in February and salaries could be paid only on 15 March.

Facing one of the worst financial crisis, BSNL for the first time in 19 years failed to pay
salaries in February, leading to questions about impact of competition on the public sector
undertaking and its ability to withstand it. Blaming the "fiercest competition" for BSNL's
current weak financial position, Gupta said, adding: "The predatory tariff offerings by the
competitors led to sharp decline in the revenue from services." According to him, the
telecom sector has been facing fiercest competition and no other sector has faced such an
unprecedented competition in recent times. Despite experiencing the pressure of
competition on its revenues, he said BSNL had been able to sustain its customer base.

"The telecom sector being capital-intensive, wherein even to remain in business 'or'
to ensure business sustainability, the service providers are required to invest in new
technologies at frequent intervals as technologies evolve at a fast rate. The cumulative
effect of all these have resulted in liquidity crunch," he said. Saddled with 1.76 lakh
employees, mostly from the government, 55% of the BSNL's revenues is consumed by
salaries. Its monthly salary bill is around ₹1,200 crore.

With a bloody price war unleashed by Reliance Jio, the incumbents -- Airtel
and Vodafone Idea -- are reeling under declining profits or losses. And so is the BSNL, a
government-owned corporation.

Revival plan under government's active consideration:

BSNL

It is clarified that there is a plan under active consideration for revival of

BSNL by Government of India by giving suitable package in terms of VRS/4G
spectrum and allowing monetisation of assets available with BSNL," it said in
statement.

BSNL said it has served the nation especially during difficult times of natural
calamities, and provides affordable services throughout India even at
remotecorners

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India’s Department of Telecommunications is considering that the matter
requires urgent focus, and meetings are on to find a solution to ensure there is
no impact on day-to-day operations of exchanges and other business, once the
VRS plan concludes. 57,000 BSNL employees opted for VRS on Friday
evening, four days after the VRS plan was rolled out. Nearly one lakh BSNL
employees are eligible for the VRS out of its total staff strength of about 1.50
lakh. BSNL’s internal target for VRS is pegged at 77,000 employees, which
essentially means that if the VRS reaches full target, the staff strength will
come down by half. The effective date of voluntary retirement under the
present scheme is January 31, 2020. BSNL chairman and MD P K Purwar said
that the telecom operator is planning business re-engineering and business
continuity. “We have to work meticulously because we have started taking the
data, which SSA, which unit, how many people are taking VRS. We will still
be left with about 80,000 people. So, the numbers are not less…but it will be
almost half. The work culture will also have to change,” Purwar said. BSNL
may be considering the hiring of the personnel opting for VRS of as
consultants in order to ensure business continuity. The other options include
tendering or outsourcing some of the work or roping in retired officers of the
telecom department who are already familiar with the tasks. Dot source said
that outsourcing certain operations will require time, including transition period
of 2-3 months after finalization of tender, and given that the VRS will come
into effect from January, a solution will have to be arrived at soon. BSNL
Voluntary Retirement Scheme – 2019 that was rolled out last week will remain
open till December 3. BSNL is looking at savings of about Rs 7,000 crore in
wage bill, if 70,000-80,000 personnel opt for the scheme

. According to the scheme all regular and permanent employees of BSNL

including those on deputation to other organisations or posted outside the
corporation on deputation basis, who attended the age of 50 years or above are
eligible to seek voluntary retirement under the scheme.

The amount of ex-gratia for any eligible employee will be equal to 35 days
salary for each completed year of service and 25 days salary for every year of
service left until superannuation.

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Identified Challenges in Revival /Restructuring of
BSNL

The challenges facing BSNL can be classified into three major heads:

1. Technological/Market: These include the rapid evolution of technology

(5G, IOT), fast evolving consumer needs of data consumption, changing
demographics patterns and increasing role of content in driving businesses.
Such a combination of technology/market characteristics requires organizations
to have agility, build partnerships, reduce costs, and be innovative. On all these
dimensions BSNL has significant challenges. The mechanism for responding to
the challenges is not elaborated as it is included in the part on organizational
challenges

. 2. Policy Environment: Since BSNL is 100% government owned, it is often

subject to the delays and decisions made by the government. For example,
while the government has transferred its liabilities (i.e., workforce) to BSNL,
the transfer of land and building assets are yet to be completed. There seems to
be a lot of confusion surrounding the ownership of the land and building assets
of BSNL.

3. Organizational: These are specific to the systems and processes adopted by

BSNL. These relate to delays in procurement due to its own inefficiencies and
the need to follow guidelines for public procurement; centralization of
deployment of tariff plans, leading to inflexibility in service offerings; poor
linkage of performance with incentives, frequent transfers etc. The larger
challenges relate to developing organizational responses on rapid developments
in the sector, building partnerships, enhanced marketing orientation.

Below we describe some of the significant challenges being faced by BSNL in

those categories where BSNL/Dot could take action.

Policy Environment

a. Delay in allocation of 4G spectrum

b. Lack of a separate project organization: BSNL operates as a single entity

under a UAS License: All telecom service operators have to pay 8% revenue
share from all activities that occur under the UAS License. BSNL’s bid for
projects, including those that do not explicitly involve telecom services is
higher due to the revenue share. This makes its bid uncompetitive. In
comparison, other operators have set up subsidiaries that can undertake such
projects, and thus there is no mandate of revenue share.

c. Flux in the Decision Regarding MTNL: MTNL serves the national capital
region and Mumbai. BSNL serves the rest of the country. All telecom service
providers have panIndia presence and earn about 40-50% of the revenues and
30-40% profit from these two metropolitan cities. However, despite this,

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MTNL has been suffering mounting losses. The operation of BSNL and MTNL
as two separate entities is economically, operationally and financially sub-
optimal.

d. Delays in Project Allotment and Project Funding: The project allotment

may get stuck due to bureaucratic procedures and processes, and also delays in
decision-making. Often times, lack of clarity of criteria on which to base
decision is missing. Also, at time the payments for the approved and completed
projects is delayed by Dot. The delays in 14 allotment of projects and the
payments from Dot leads to avoidable demonization and financial loss for
BSNL.

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Chapter :2
Literature review

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A literature review or narrative review: is a type of review article. A
literature review is a scholarly paper that presents the current knowledge
including substantive findings as well as theoretical and methodological
contributions to a particular topic. Literature reviews are secondary sources and
do not report new or original experimental work. Most often associated with
academic-oriented literature, such reviews are found in academic journals and
are not to be confused with book reviews, which may also appear in the same
publication. Literature reviews are a basis for research in nearly every
academic field. A narrow-scope literature review may be included as part of
a peer-reviewed journal article presenting new research, serving to situate the
current study within the body of the relevant literature and to provide context
for the reader. In such a case, the review usually precedes the methodology and
results sections of the work.

Producing a literature review may also be part of graduate and post-graduate

student work, including in the preparation of a thesis, dissertation, or a journal
article. Literature reviews are also common in a research proposal or
prospectus (the document that is approved before a student formally begins a
dissertation or thesis)

The objective is to examine existing research on customer retention and its

determinants in order to establish a theoretical basis and identify the research
gap. Identification of research gap will permit the study to hypothesize the
linkage among the different constructs currently acknowledged to affect
behavioural intentions and outcome of customer retention.

Customer Satisfaction:

Consumer satisfaction is the level of an individual’s felt state resulting from

comparing a product's perceived performance in relation to the expectations.
This satisfaction level is a function of difference between perceived
performance and expectations. If the product's performance exceeds
expectation, the customer is highly satisfied or delighted. When the
performance matches the expectations, the customer is satisfied.

According to Anderson, C. Fornell, D.R. Lehmann (1994) Service providers

frequently place a higher priority on customer satisfaction, because it has been
seen as a prerequisite to customer loyalty. Zeithaml, L.L. Berry and A.
Parasuraman (1996) found low customer satisfaction has been associated with
complaining behaviour.

Customer satisfaction makes the customers loyal to one telecommunication

service provider.

According to Anderson, Fornell and Mazvancheryl, (2004), it is expensive to

generate satisfied and loyal customers but that would prove profitable in a long
run for a business. Therefore a firm should concentrate on the improvement of

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service quality. In the various factors T. V. Ramachandran (2005) studied that
the Indian consumer is extremely price sensitive. Rajpurohit R.C.S. et al.
(2011) have conducted study and reveals that consumers prefer a particular
cellular service provider on the basis of network coverage, call tariffs and value
added services.

Service Quality:

The service quality has become a key concern in telecom marketing and has
received much attention from the post liberalisation in India. The service
quality is also remaining important part in augmented competition within
telecom service industry.

Kumar Ratnesh & Dr. Amit Kansal (2013) have observed that there
is high rivalry among the players in the Indian telecom industry and every
player is providing special offers and schemes to maximize their subscriber
base.

Rakshit Negi (2009) have studied the Mobile Communication and found
overall service quality of mobile communication was below average.

The highest quality gap was observed in the case of networking. Therefore,
better transmission quality, network coverage will improve the customer
perceived quality.

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 SWOT ANALYSIS OF BSNL:

Strengths in the SWOT analysis of BSNL :

1. Backed by Government of India : It was incorporated on 15 September

2000 and took over the business 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 in an
ongoing concern basis. Ever since the formation of BSNL, the Indian
telecommunications scenario has been transforming itself into a multi-player,
multi- product market with varied market sizes and segments.

2. Extensive infrastructure in remote areas : BSNL has installed Quality

Telecom Network in the country & now focusing on improving it, expanding
the network, introducing new telecom services with ICT applications in
villages & winning customer’s confidence.

3. PAN India-reach: You name the place & BSNL is there. It has about 43.74
million line basic telephone capacity, 8.83 million WLL capacity, 72.60
million GSM capacity, 37,885 fixed exchanges, 68,162 GSM BTSs, 12,071
CDMA Towers, and 197 Satellite Stations.

4. Huge Optical-Fibre infrastructure: Fibre-based cable networks act as a

backbone to transmit data on wireless networks. BSNL has 6,86,644 RKm. Of
OFC, 50,430 RKm. of microwave network connecting 623 districts, 7330
cities/towns & 5.8 lakhs villages.

5. Strategic alliances with IT & hardware companies: It got into many

strategic alliances for IT & hardware requirements like with Ericsson , Cisco ,
HP , Compaq , NFL , MTNL etc. in order to run the business smoothly.

6. Vast Experience: The Company has vast experience in planning ,

installation, network integration & maintenance of switching & transmission
networks & also has a world class ISO 9000 certified Telecom Training
Institute. It has 3 training institutions and 4 specialized telecom units.

Weaknesses in the SWOT analysis of BSNL:

1. Working culture of government Institution : Despite having stiff

competition in telecom sector making private players to design their strategy
cautiously BSNL is still running on Bureaucratic type of setup.

2. Network capabilities: Although BSNL have 62000 tower & wireless

networks stretched to 6,86,644 RKm. of OFC, 50,430 RKm. of microwave

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network connecting 623 districts, 7330 cities/towns & 5.8 lakhs villages, they
are not able to optimize the network capabilities.

3. Unproductive rural assets: Problems associated with outdated

technologies, low ROI form of rural assets & Political interference is making
the company handicapped.

4. Poor Service Image: With the advent of technologies & new players
foraying in the telecom sector serviceability & CRM is important aspect for
the growth of the business but BSNL has maintained its poor service image
since its incorporation.

5. Unable to retain customers : Forget about acquiring new customers BSNL

is not able to retain their customers due to its poor service & outdated
offerings.

6. Poor marketing: Poor franchisee networks, Lack of market research ,

confused segmentation are some of the poor marketing strategies leading to the
downfall of BSNL.

7. Decreasing market share : Although there is increase in tele-density

(75.2%; 2014), BSNL’s market share is on continual decrease. It is currently in
5 th position having only 10.5% market share .

Opportunities in the SWOT analysis of BSNL

1. Strategic Partnership : Partnering with the smartphone companies is going

to be smart strategy as far as MNP (mobile number portability (India)) is
concerned which will ensure fixed cash flows in the future.

2. Partnering with other telecoms: Partnering with other telecoms to revamp

their loss making, poorly managed, extensively stretched infrastructure will
help them in turning around the company. Redeployment of unutilized
capacities, Integrating IT infrastructure should be considered.

3. Customer Retention : Customer retention through a combination of loyalty

schemes, better Tariff, service standards, low call drops better network
availability & reach will result into low switchers & low acquisition cost.

4. Improving upon Intangible capabilities: Company is well placed in

tangible capabilities like resources, infrastructure but they need to work on
intangible capabilities like skill & motivation, Knowledge & Aging workforce .

Threats in the SWOT analysis of BSNL

1. Government Regulatory Framework: With the auction of spectrum &

change in the policies on a regular basis, there is a lot of instability in the
telecom industry.

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2. Competition: Price war in the home market, technologically advanced
private players and declining margins is adversely affecting the overall
business of the company.

3. MNP (Mobile number portability): MNP gives the customer independence

to change the service provider while retaining the number and the number and
due to high call drops, network issue & worst CRM will result into slump in
subscriber base in the next fiscal with PAN India MNP implementation from
May 3 rd 2019

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