CITY CAMPUS Strategic ManagementProject Report: Developing a Strategic VoIP Plan Instructor : Sir Adnan Anwar Class ID : Group Members: Syeda Hira Warsi (5194) Mohammad Rashid Ali (5337)
Table of ContentsExecutive Summary of Issues: ..................................................................................................................... 42 Discussion Points..................................................................................................................................... 42Introduction: What is VoIP (Voice over Internet Protocol) ........................... Error! Bookmark not defined. Evaluation of VoIP: .................................................................................................................................. 41 Figurative Representation: ..................................................................................................................... 41The Business Planning Process...................................................................................................................... 7Vision and Values .......................................................................................................................................... 4Internal and External Assessments ............................................................................................................... 8Characteristics of a Good Strategic Business Plan ........................................................................................ 9Strategic Plan Recap ...................................................... 10SWOT Analysis: ........................................................................................................................................... 15 Strength: ......................................................................................................................................... 15 VoIP Service Weaknesses ................................................................................................................ 15 Competitive Advantage: ................................................................................................................. 15 Threats: ........................................................................................................................................... 15
ACKNOWLEDGEMENTAs the students of.Strategic Management course – CID: and all the preaching and guidance of our course teacher Mr. Adnan Anwar. I hereby present my final project as required on firm belonging to telecom sector. i.e Procomm Pakistan Limited One of the leading VoIP service provider alongwith value added service and business strategies. We also hereby present all the facts and figures which I gather aboutProcomm Pakistan are from newspapers, websites and from Procomm‟s annual report. Due to myjob and other secular activities I couldn‟t be able to approach the firm directly, howeverwith the help of my group members we researched closely over Procomm Pakistan. We prepared this project for consideration of approval of our learning and understanding about the subject.
Mission Statement:“Our aim is to introduce people to the concept of VoIP and allow people to experiment with VoIP by ofhaving innovative facilities for almost free for both inbound and outbound calling from Pakistan”.VoIP = Voice over Internet Protocol (the mix of Telecommunication and Internet)Industry:Telecommunication based projet.Product or Service:VoIP = Voice over Internet Protocol (the mix of Telecommunication and Internet)Vision and Values“To be the best in providing Cheaper and Good Quality Services in Telecommunication sector ofPakistan”“Steps to get Telecommunication Service free of cost in Pakistan” Vision What I/we can be best in the world at! What I/we will be best in the world at! Values What’s important What we feel best being What we like to do bestSlogan:“4th Dimension in technological era”
LOGO Of the Company:Partner’s profile:Partner # 1:Syeda Hira WarsiM.B.AC.E.O of Voip24Partner # 2:Mohammad Rashid AliM.B.AC.F.O of Voip24Idea Generation:As we are all aware the telecommunication usage and technology is increasing time by time. VoIP (Voice over IP) which intiates the voice over the Internet to communicate for free remotecomputer to computer. the technological revolution is now increasingly on mobile phones that areequipped with features more impressive especially the internet and all its services. the mobile phone isbecoming a more mobile computer. also, the internet service on mobile next generation reached aremarkable level of connectivity.The goal of our project is to introduce VoIP service in Pakistan. This will allow two or morecorresponding with the internet service on their mobile phones, PCs and Landlines to communicate for
almost free. The quality of communication will depend, of course the flow of the correspondingconnection.Business Description:Here is the description about this business. This business will be operated in Karachi and in futureexpansion will be made on favorable conditions. Currently such kinds of business are not been operatedas we are introducing an innovation in Telecom Services sector from here and we will operate in aninnovated way. A New company with Innovation Services is conceptually difficult to operate but there isgeneral market for each and everyone who wants to have cheaper telecom services in Pakistan.Recently there are no competitors we are providing business awareness and creating demand so thenthere will be tough competition in market. But we are going to avail opportunities by Cost Leadershipstrategic plan for achieving competitive advantage over others.Well our plan for segmentation is untouched because telecommunication needs are equally importantfor lower to upper class so that our target is to cover 80% audiences of Pakistan.Technological Description:VoIP is a technology that allows telephone calls to be made over computer networks like the Internet.VoIP converts analog voice signals into digital data packets and supports real-time, two-waytransmission of conversations using Internet Protocol (IP).VoIP calls can be made on the Internet using a VoIP service provider and standard computer audiosystems. Alternatively, some service providers support VoIP through ordinary telephones that usespecial adapters to connect to a home computer network.VoIP offers a substantial cost savings over traditional long distance telephone calls. The maindisadvantage of VoIP is, like cell phones, a greater potential for dropped calls and generally lesservoice quality.
Vision and Values Vision What I/we can be best in the world at! What I/we will be best in the world at! Values What’s important What we feel best being What we like to do bestInternal and External Assessments Internal Assessment What does it cost our business to do different types of business in different markets? What are we equipped to do? What will it take and cost to support the intersection of excellence, passion and profitability? External Assessment What will it take and cost to establish us and our company’s unique brand/image of excellence in the marketplace? (as there is no competition in Pakistan yet) How will competing services and other external forces impact our ability to sustain excellence and profitability? How do I ensure that our business works the Best? Set the Direction Market Plan Sales Plan Technology Plan Budget
Turn the Business Plan into Reality Execute the Plan Adjust the Plan Execute the Adjusted PlanCharacteristics of a Good Strategic Business Plan Unique and appropriate to your business Right level of detail for your business Easy to deploy throughout organization Roadmap to align resources Roadmap for decision-making and culture Easy to use Results-focused
Strategic Plan RecapCompany Profile: Features; Benefits Streamline business processes across Voice over Internet Protocol (Voice over IP, VoIP) is a family of technologies, methodologies, the enterprise saving time and money. communication protocols, and transmission Take advantage of low total cost of techniques for the delivery of voice communications and multimedia sessions over ownership. Internet Protocol (IP) networks, Manage customer revenue streams
effectively and efficiently. Cost SavingsExploit existing revenue streams to thefullest. Saving money is the number-one reason most businesses and households make theIdentify and exploit new sources of switch to a VoIP system. You can realizerevenue ahead of the competition. cost savings in a few ways: First, your charges will be lower than they would beReduce costs by collaborating over the using a traditional phone line. Why?Web with key business partners. Because VoIP calls can’t be routed geographically- they use the internet toWin new customers in established and send call data instead of a traditionalnew market segments. phone line- no long distance charges can be added to your bill.Increase customer loyalty and revenueper customer by delivering personalized VoIP systems don’t require a phoneproducts and services. cabinet or on-site routing equipment- justAchieve greater cost transparency and phones. No on-site equipment means nocontrol. need for on-site maintenance, as well.Reduce the number of expensive legacy VoIP can save the typical small businessapplications and their interfaces. thousands of dollars or more in phone bills, equipment charges, and maintenance fees. Features VoIP also allows users to take advantage of advanced features only available on internet-based phone systems. Features like online call monitoring, and online phone system access to add or configure extensions are also available with VoIP systems. Flexibility VoIP allows people to go mobile and call directly from their cellphone and be charged at low voip rates. You can visit the page mobile voip to learn more. Tracking Options Since VoIP is an internet-based system, you can track and manage your system from your computer. Most VoIP systems allow you to track call volume and call time fairly easily- a feature that can be especially helpful for businesses that bill
clients hourly or for time spent on thephone.AdvantagesOperational costVoIP can be a benefit for reducingcommunication and infrastructure costs.Examples include: Routing phone calls over existing data networks to avoid the need for separate voice and data networks. The ability to transmit more than one telephone call over a single broadband connection. Secure calls using standardized protocols (such as Secure Real-time Transport Protocol). Most of the difficulties of creating a secure telephone connection over traditional phone lines, such as digitizing and digital transmission, are already in place with VoIP. It is only necessary to encrypt and authenticate the existing data stream.
Introduction: Challenges: 1. Definition of VoIP VoIP is broadly used term to describe: Quality of service The delivery of voice services Communication on the IP network is over an IP network inherently less reliable in contrast to the The ‘convergence’ of voice and circuit-switched public telephone network, as data over a single IP network it does not provide a network-based infrastructure mechanism to ensure that data packets are not Plugging a desktop phone into the LAN lost, and are delivered in sequential order. It is Using your computer to make a best-effort network without fundamental phone calls Quality of Service (QoS) guarantees. Traditional voice service Therefore, VoIP implementations may face becomes an application on an problems. IP network By default, network routers handle traffic on a Uses a WAN/LAN to deliver first-come, first-served basis. Network routers voice services or… on high volume traffic links may introduce Uses the Internet… latency that exceeds permissible thresholds or a combination of both… for VoIP. Fixed delays cannot be controlled, • RoadRunner, as they are caused by the physical distance the DSL, etc. from packets travel; however, latency can be home • VPN minimized by marking voice packets as being delay-sensitive with methods Emergency calls The nature of IP makes it difficult to locate network users geographically. Emergency calls, therefore, cannot easily be routed to a nearby call center. Sometimes, VoIP systems may route emergency calls to a non-emergency phone line at the intended department; in the United States, at least one major police department has strongly objected to this practice as potentially endangering the public Lack of redundancy With the current separation of the Internet and the PSTN, a certain amount of redundancy is provided. An Internet outage does not necessarily mean that a voice communication outage will occur simultaneously, allowing individuals to call for emergency services and many businesses to continue to operate normally. In situations where telephone
services become completely reliant on theInternet infrastructure, a single-point failurecan isolate communities from allcommunications.Number portabilityLocal number portability (LNP) and Mobilenumber portability (MNP) also impact VoIPbusiness. Number portability is a service thatallows a subscriber to select a new telephonecarrier without requiring a new number to beissued. Typically, it is the responsibility of theformer carrier to "map" the old number tothe undisclosed number assigned by the newcarrier. This is achieved by maintaining adatabase of numbers. A dialed number isinitially received by the original carrier andquickly rerouted to the new carrier. Multipleporting references must be maintained evenif the subscriber returns to the originalcarrier.
SWOT Analysis: Strength: Requires up front credit card payment Assumes user has a high speed Internet service in place It’s easy to beat a tariff rate… VoIP Service Weaknesses Typically residential and small business Usually at a monthly flat rate for local & LD Competitive Advantage: Reduced costs High availability & reliability Enhanced services Efficiency Better product support Improved manageability Threats: IP Telephony Vendors Telecom Vendors Targets medium to large business Telecom Vendors Use existing data network (LAN) to provision IP telephones Telecom Vendors enterprise features & applications time by time Telecom Vendors use Packaged appliance Telecom free Licensing per port /seat
Telecom Vendors are Secure / EncryptedComparative Review: Competitive AdvantageThe primary Benefits of a VoIP System are: One Wiring system Instead of separate wiring for telephones and separate wiring for data, all data and voice are on the LAN. There is usually plenty of bandwidth available on a well designed LAN. Web based administration With a VoIP system, all system administration functions are performed on the network usually through a browser based administration program. This means that the system can be modified from anywhere if required. Leveraging the Internet for telephone calls When calls flow over the Internet, long distance charges are avoided. This is great for remote workers who can stay logged into the office all the time without incurring any additional charges. Private Instant messaging Instant Messaging is a great corporate tool when used properly. With a VoIP system, Instant Messaging can be limited to corporate business eliminating some of the security issues associated with public Instant Messaging sites and provides complete control to management. Peer to Peer phone calls All calls are Peer to Peer. This is a big advantage over the traditional PSTN. The call is set up by the VoIP server then the call flows between the two endpoints. All of the voice or video traffic is direct between the two endpoints reducing the congestion at the server. Peer to Peer Video Video sessions can be set up between endpoints. Remote users Everyone who is logged into the system is capable of receiving and originating calls. If an employee is at a remote office in Seattle and a call comes into the corporate headquarters in Chicago, the call can be directed to the employee in Seattle just as if that person were in Chicago. The use of the corporate communication resources such as voice mail, automated attendant and email are all centralized simplifying all support and maintenance. Presence Management VoIP applications can take advantage of presence management. This is a function of the system that allows users to set how other users view their presence on the system. Most systems have tremendous flexibility. This is not too different from using the “do not disturb” button on your legacy PBX telephone, but it really comes into its own when using a soft phone. Reduced Costs Cost reduction in operating a VoIP system covers just about all areas of the business. Investment Protection VoIP and in particular SIP based VoIP products offer investment protection. While the industry is moving toward IP communications technologies, users are adopting these technologies at a gradual rate. This trend is nothing new.
Questionnaire AnalysisTelephony issues for start-upsStart-up businesses often face the following telecoms-related issues when moving into commercialproperty for the first time: Residential phone numbers: residential telephone numbers often get associated with a business if a start-up works from their home. When it’s time to move the business to new premises, many find that the residential number cannot be transferred to a business line, and in many cases, a business or residential number cannot be transferred at all – even when the new line is supported by the same exchange. It is extremely rare to be able to transfer a phone number from one line to another. Lock-in contracts: Start-ups do not know that there are many more options available to them than offered by BT. BT offer very good deals for install of new lines etc, but do so because their contract periods are long (three to five years). While this helps cost-wise, it may lock the start- up into options that will be restrictive when they want to adapt their telecoms systems to changing business needs. Scalability issues: as numbers of staff increase start-ups usually have more than one home office associated with the business, so this can mean that there are multiple contact numbers that become associated with the business and communications between staff are not cost-free. Call transfer and diversion are also relatively expensive, as all outgoing calls of any nature are charged to the subscriber. Expensive call diversions: Many businesses also set up call diversions from their business numbers to mobiles. This means that the business ends up paying for calls to them, by their customers. A call diversion from a landline to a mobile can cost between 10 and 20 pence a minute.How do VoIP technologies benefit start-ups?VoIP technology will allow a start-up company to generate phone numbers that will stay with themforever, no matter how many times and to where the company relocates.Numbers for any UK geographic area code can be applied to a VoIP system and therefore, a start-up canadvertise phone numbers that indicate their presence in the area(s) that they wish to work in.Direct Dial Inward (DDI) numbers can be allocated to VoIP systems that allow a call to be directed toone or a group of telephone extensions. This also makes it possible to have more phone numbers thanlines – which is useful if you want to direct certain types of calls, and certain types of customers, toparticular staff in the company.A VoIP system can make the start-up appear bigger than it is, due to the ease that its customers find inaccessing the different parts of that business. Even if the same staff are handling calls, it will make a bigdifference if a call to e.g. customer support is greeted differently to a call to the sales line.A single analogue line with broadband can act as the communications path for the start-up company,
providing up to 12 virtual lines within that one physical line. This means that as the company expands,the per-head costs to add telecoms services actually decrease.VoIP systems can be deployed extremely quickly onto existing broadband services. Therefore, set up andchanges are done as the business requires them without delay.What are the cost savings that can be made for start-ups?Initial cost savings are not so apparent, as a single phone on the end of a BT line will be cheaper than theline, broadband and a VoIP phone. Also, setting up a VoIP class local network is a bit more expensivethan throwing a cheap router and network switch together.However, as soon as that business starts to grow to two, three or more people, the cost savings areimmediately apparent, as additional lines or extensions can be added to a VoIP system at much lowercost than installing further analogue lines. Situations occur where start-ups have taken the cheap optionfor telecoms, but found themselves contractually tied even three years later - to the extent that theycannot change their telecoms equipment and lines without large penalty payments.A traditional analogue phone line will take around two to four weeks to install, with an installation costof around Rs.12000, and cost roughly Rs.1400 per month. A typical SIP trunk line (a bonded line that cantransmit multiple voice calls) can be installed in 24 hours, with zero install cost, and rental of just £2 permonth.Decisions have to be made at an early stage, regarding the nature of the business over the next fewyears, such as staff numbers, staff location, and markets that the business want to appear in. These willall affect the start-up’s telecoms strategy.VoIP pushes a start-up down the direction of setting ICT systems up correctly from the beginning, ratherthan buying a lot of low-cost IT that will have to be replaced in a year.It is possible to start off with hosted VoIP extensions, and later migrate those to an IP-PBX (see our guideto VoIP for more information on the difference between hosted VoIP and IP-PBX). So choice of onetechnology does not block the use of the other.What kind of installation process is there and how long does it take?Installation differs between hosted VoIP and an IP-PBX install – but timescales are still similar. HostedVoIP extensions can be installed in in around three days. A simple IP-PBX system could be generated andinstalled in around five working days for a start-up company.
The latter would involve installation of a server PC and a voice-aware network switch, and theconfiguration of a single router to prioritise voice on the Internet connection. During install, incomingcall plans would be generated to ensure that calls are routed and answered as the company needs themto be both inside and outside of business hours. Additional services such as voice-mail and auto-attendant can be configured during install, or later as the company develops its communicationsstrategy.IMPLEMENTATION:VoIP: Acceptance and GrowthWhat are the forces driving the transition to VoIP? In a few words, they are cost and marketliberalization.This section explains how these powerful drivers have turned VoIP from a niche market to a newfoundstatus of acceptance and growth in many economies.2.1 The Cost FactorThe high costs of maintaining legacy networks are a key force driving the growing adoption of IP-basednetworks, alongside the need to upgrade to intelligent networks with inherent monitoring and adaptivecapabilities. Transmission over IP-based networks can cost as little as a quarter of equivalent PSTNtransmission. Moreover, it can save 50-60 per cent in maintenance costs, because an IP call can requirejust 10 per cent of the bandwidth required for a PSTN call. As they review these cost advantages, manyoperators realize that they have to respond to competitors (domestic and foreign) and positionthemselves in a truly global communication industry. IP-based networks often appear to be the bestfoundations for business-critical applications, as operators integrate voice and data networks.Consumer VoIP applications can run over a range of devices, offering flexibility in the first step towardsseamless communications. For some operators, IP-based transmission is the first step in implementingan NGN strategy, although true NGN is a broader concept that involves specific QoS guarantees andgeneralized mobility not offered by most types of VoIP. Still, some incumbent operators may bereluctant to introduce VoIP, because they already offer voice services over the PSTN. Perhapsunderstandably, they do not wish to cannibalize their higher-margin international service offerings(particularly if tariff rebalancing has not been fully implemented). They perceive a quandary:introducing VoIP could enhance their brand and portfolio of services, but it also could be interpreted asa concession to competitors. However, the reality is that convergence, in the form of VoIP services, isredefining markets and blurring boundaries between networks and content. VoIP is eliminating barriersto entry (because competitors no longer need to own a network) and bringing facilities-based providersunder direct competition from service-based competitors. The market transition, meanwhile, isredefining the role of telecommunication regulators.
Benefits:Voice over IP (VoIP) was developed in order to provide access to voice communication in any placearound the world. In most places, voice communication is quite costly. Consider making a phone callto a person living in a country half the globe away. The first thing you think of in this case is yourphone bill! VoIP solves this problem and many others.There are of course a few drawbacks attached to the use of VoIP, as is the case with any newtechnology, but the advantages largely outbalance these. Lets explore below the benefits of VoIP andsee how it can improve your home or business voice communication.Save a lot of moneyIf you don’t use VoIP for voice communication, then you are most certainly using the good old phoneline (PSTN – Packet-Switched Telephone Network). On a PSTN line, time is really money. You actuallypay for each minute you spend communicating on the phone. International calls are much moreexpensive. Since VoIP uses the Internet as backbone, the only cost you have when using it is themonthly Internet bill to your ISP. Of course you need broadband Internet access, like ADSL, with adecent speed. In fact, unlimited 24/7 ADSL Internet service is what most people use today, and thiscauses your monthly cost to be of a fixed amount. You can speak as much as you wish on VoIP andthe connection cost will still be the same.Studies have shown that, compared to using a PSTN line, using VoIP can potentially make you save upto 40 % on local calls, and up to 90 % on international calls.More than two personsOn the phone line, only two persons can speak at a time. With VoIP, you can setup a conference witha whole team communicating in real time. VoIP compresses data packets during transmission, and thiscauses more data to be handled over the carrier. As a result, more calls can be handled on one accessline.Cheap user hardware and softwareIf you are an Internet user wishing to use VoIP for voice communication, the only additional hardwareyou require besides your computer and Internet connection are a sound card, speakers and amicrophone. These are quite cheap. There exist several software packages downloadable from theInternet, which you can install and use for the purpose. Examples of such applications are the well-known Skype and Net2Phone. You do not actually need a telephone set, which can be quite expensive,along with the underlying equipment, especially when you have a phone network.The Market Liberalization FactorProgress in VoIP adoption and legalization is closely connected with market liberalization. VoIP can beseen as a technology for introducing competition -- and gaining a competitive advantage -- in liberalizednational and international telecommunication markets. Ironically, this is not always welcome. Countries
seeking to market second national operator licences may resist introducing VoIP in order to maintain thevalue and attractiveness of the second licence. This may be a contributing factor, for example, in Egypt’sdelay in fully legalizing VoIP for residential use – despite VoIP’s growing popularity there.1. Market Overview Of Mobile Companies in PakistanThe Pakistan market has nearly 97 million subscribers as of Nov2009 (PTA data).The growth sloweddown in 2009 but has picked up again gradually. See more about the recent competition amongmobile network providers.For those interested in the change from last year, the chart below shows the market share of mobilephone companies of Pakistan, as of September 2011. Compared with July, the market share changedlittle. Mobilink lost 1% share (35%), picked up by Zong which is cash rich and has a ready-to-investattitude.The ARPU in Pakistan remains low and is not projected to go up. The year 2011 was marked bychanges in SIM sales and registration process, enforced by PTA, the government regulator.
If you are interested in the actual numbers and analysis, leave a comment for me.Now let’s review some recent history. At 2009 year end the total subscribers were 48.2 million. InJune 2010 the total mobile users reached over 63 million. Based on numbers published at PTA websitefor 2010, the total number of subscribers (technically it is the number of SIMs issued) was 76.6million, a teledensity of nearly 49%. In 2010 the average growth rate was about 2.5 million newsubscribers each month! After second half of 2010 it seemed as if the growth had slowed down butoverall it was fine. One remarkable achievement was by Zong (formerly Paketl) which launched verysuccessful campaigns towards 2010 end completed rebrand launch in April of 2011. See this chart fora breakdown of market share by mobile companies at the end of Q1 of 2010.For detailed one-page tariff information for all the packages (pre-paid and postpaid) offered bythe mobile companies, refer to the consumer notice from PTA below - posted as of August 4, 2011.
Here’s a brief description of the top mobile companies in Pakistan.At the top is Mobilink, the Pakistani unit of Egypt-based telecom companyOrascom. It has been operating in Pakistan since 1994. Subscriber share is 35%at the end of Sep 2011.Ufone, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL),is now under the control of Etisalat group of UAE. It has 21% of subscriber shareand added the most lines (2.4 million) from 2009-07. For those in Pakistan it isthe one company where they can easily invest locally.Warid, owned by the Abu Dhabi group of the United Arab Emirates and sister ofWateen group is number 4 with 18% market of subscribers. Recently it sold 30%share to SingTel.Norway’s Telenor, a recent entrant with about a billion US dollar investment inPakistan has been doing well, based on its recent earning report. It has about20% of the market share. Telenor stock is listed in the Oslo stock market (TEL)and in US(TELNY.PK).CMPak (Zong brand), formerly Paktel, was the latest target of foreign acquisition.After it got acquired by China Mobile it was rebranded as Zong and launched one ofthe most successful and aggressive campaigns. Within a matter of few months, Zong has achieved a6% market share.2. Fixed Wireless (WLL)Please see this post for an overview of the WLL operators and technology. Wireless localloop services are based on CDMA and are considered an alternative to copper lines.Recently rebranded Vfone service by PTCL is the market leader and recently there havebeen many intersting marketing and pricing moves. You may also follow this link for alist of WLL providers from PTA site.3. WiMAX This post provides a summary of WiMAX situation in Pakistan. Wateen has emerged
as the largest player and has started advertising for its WiMAX services though as of Sep 2010 thepricing had not been announced. Mobilink Infinity also started commercial WiMAX service in Karachi.Dancom used to be an independent provider but it was acquired by Mobilink. Wi-tribe is anotherplayer.4. Voice over IPCompanies providing VOIP and call forwarding services. In other words: International calls, local rates.See my posts about VOIP related issues for Pakistan. Vonics (more about Vonic’s Pakistan Plan) BRAIN TEL (Lahore only) CallPakistanDirect Rebetel - not specific to Pakistan FreeCallPlanet – not specific to PakistanThe table below gives a comparison of various cellular operators. All facts and figures have beentaken from PTA‟s Annual report 2010. No. of Investment Market Technology ARPU Subscribers in 2010 Share (USD) (USD) Mobilink 28.5 Million 336.9 Million 44.3% GSM 3.8 Ufone 15.4 Million 250 Million 20.9% GSM 2.8 Telenor 12.5 Million 130 Million 16.3% GSM 4.0 Warid 11.9 Million 425 Million 16.1% GSM 2.5 Instaphone 0.3 Million 8.5 Million 0.6% CDMA 2.1 Paktel 1.2 Million 187 Million 1.9% GSM 3.3The growth in the mobile sector is mainly attributed to prepaid subscribers, as is the trend incomparable economies. However, after the launch of two new operators in 2009/10, the mobilesector has now built more consumer friendly strategies around postpaid packages, resulting in asignificant growth in postpaid segment, although it still represents less than 4% of the totalmobile market.
Mobile penetration has also increased tremendously. It jumped from 8.3% in 2005 to almost 23% in20091. With such increased penetration, there are still large number of rural and semi urban areas thatare still inaccessible.There are many major issues surrounding the mobile sector like low ARPU, cost of doingbusiness, infrastructure cost sharing, interconnect, regulatory issues, system inefficiencies etc.The future of mobile sector in the country requires convergence of services, elimination ofdigital divide, effective regulation in changing telecom environment and adoption of potentialtechnologies. The technology, service and infrastructure convergence is taking place at a veryfast pace in Pakistan.While forecasting the mobile market, Business Monitor International (BMI) has estimated 78.4Million subscribers for Pakistan by 2011, in its Pakistan Telecommunication Report Q2.LDILiberalization of „long distance and international‟ (LDI) segment of the telecom sector in 2004resulted in the award of new LDI licenses apart from the incumbent PTCL and NTC. Intensecompetition in the LDI section has resulted in drastic reduction of international and nationwidetariffs and substantial increase in traffic. Currently Callmate, Burraq, DV Com, Circlenet,Dancom, PTCL, Wateen, Multinet and WorldCall are providing international calling cardfacilities.Multinet, one of the new LDI licensees is developing its own nationwide fiber optic backbone.At present all the telecom operators are relying on PTCL‟s infrastructure. Wateen has alsostarted laying nationwide fiber optic infrastructure. These two alternatives are considered to beenough for providing infrastructure redundancy in the country.
The LDI market in Pakistan is at its blossoming stages and the new LDI operators areaggressively participating in the market to capture the maximum share of LDI business in thecountry. During the last year or two, companies doubled their investments in the expansion oftheir network capacity and infrastructure. Revenues of the companies had increased by 168%during 2010.There is an intense competition in the calling card business. The LDI operators have drasticallyreduced international long distance in order to capture market share. The minimum internationaltariffs, which were PKR 58 per minute in 1996, are now as low as PKR 0.5 per minute.Callmate, Dancom and Worldcall calling cards have the lowest tariffs in the market. The lowtariffs have resulted in a higher outgoing traffic. In addition, international long distance callcharges from cellular mobiles have decreased by 83% in 2009.The sector witnessed blooming health wherein telecom costumers enjoyed International dialingfor as low as 0.5 PKR per minute. However hyped up market and stringent competition led toflirtation and companies who had been involved in price discrimination finally had to suffer interms of financial losses. Companies have now started looking for foreign investment to survivein the market e.g. Worldcall has sold some of its shares to Oman telecom; also 30% of Burraq‟sshares have been acquired by Qatar telecom2.The figure below, taken from PTA Annual Report 10, shows the revenues of the LDI operatorsin the year 2010:
Only last year, total investment in LDI sector was around 51 Million USD, which grew to 603Million USD in 2010. Main contributors to this huge investment were Multinet and Link Directas both have laid their own Optical Fiber Access Network.PTCL, the incumbent operator is facing intense competition from calling cards and cellularmobile operators due to their low tariffs.The pie-chart below, taken from PTA Annual Report 10, shows the comparison of market shareof companies in the last two years.
Local Loop ServicesUnder the telecom de-regulation policy 2011, two local loop licenses were delegated namely,fixed Local Loop (FLL) and the Wireless Local Loop (WLL).The companies which have been able to start commercial FLL operations and run themsuccessfully include Brian Limited, Union Communication, World Call broadband, Nayatel,Dancom, call2phone, World Call multimedia etc. The companies are providing local loopservices including voice and internet over fiber optic.There are several issues that are hindering the new licensees from operating effectively, theseinclude inadequate infrastructure, Right of way issues and roll out obligations. Operators Total Subscribers PTCL 5,128,442 NTC 92,163 World call 13,327 Brain Limited 5,880 Union Communication 200World Local Loop operators are using the CDMA technology, which is quite comparatively easyto deploy in rural areas. The total subscriber base of WLL services in Pakistan reached around 2million in 20103. The facts and figures for the table below have been taken from PTA AnnualReport 07. Operators Cell Sites Franchises Subscribers Great Bear 19 137 57,660 World Call 182 211 304,610 TeleCard 293 301 443,914 PTCL 1,439 236 895,914
Pakistan’s Competitiveness in Telecom Economic Overview of PakistanPakistan’s economy has maintained strong growth rate and in the fiscal year 2009-07, the economicgrowth was registered at 7%. The country’s economy has been rated as one of the fastest growingeconomies in the Asia region. East Asian economies like Philippines, Malaysia, Singapore and Thailandgrew at the rates between 5% and 5.5% mostly owing to robust growth in services, agriculture andmanufacturing industry. The growth in economy is due to investments in the region. Total investment at23% of GDP is the highest in country’s history. Private sector has played a pivotal role in investmentwhereby its share in domestic investment has increased from 74.2% to 86% in the last 7 years. The percapita income has also increased from 586 USD in 2002-03 to 925 USD in 2011-10. The table belowshows Pakistan’s economic facts and figures in the last five fiscal years4. Indicator 2002-03 2003-04 2004-05 2005-06 2009-07 GDP Growth (%) 4.7 7.5 9.0 6.6 7.0 Foreign Exchange Reserves USD (Billion) 10.7 12.3 12.6 12.8 15.1 Per Capita Income (USD) 586 669 733 833 925 Population (Million) 147 150 152 155 158
Telecom Sector OverviewInvestment in Telecom SectorTelecom companies have invested over 8 billion USD during the last four years in Pakistan, with mobilesector being the main player with 73% investment share accounts. In 2009-10, cellular mobile sectorinvested over 2.7 billion USD, which is about 66% of the total investment by the sector. Local loopsegment invested 7.8 million USD in 2009-10. LDI operators invested about 603 million USD in 2009-10which is about 15% of the total investment by the sector. It is expected that the trend of investmentmay continue in the next five years because of the large potential market existing in Pakistan. The tablebelow shows the investment in telecom in the last three years. Service 2010-08 2011-09 2009-10 Cellular Mobile (USD Million) 1158.1 1420.9 2718.7 Fixed Line (USD Million) 2.3 0.3 746.9 LDI (USD Million) 35.1 50.5 602.7 WLL (USD Million) 277.3 259.4 40.5
Market PotentialCellular Mobile Companies have grabbed only 63 Million of the potential 110 Million people market,which is only 61%. If 10% multiple SIMS users are excluded, then the access comes down to only 55% ofthe target market. Similarly the fixed line operators including WLL have covered only 6.6% of thepotential population. As about 66% of the potential population in Pakistan is living in rural areas, thescenario provides a huge market potential for WLL and mobile operators.Total Number of IT Companies 1082Total Number of Foreign IT Companies 60Number of CMM & CMMI level 5 Companies 2Total Industry Size 2.8 Billion USDIT and IT-enabled services Exports 1.4 Billion USDAnnual Percentage growth in Exports 61.18%Number of IT graduates per year 20,000 approximatelyNumber of Universities offering IT/CS programs 110Total Number of IT Professionals Employed Over 110,000Number of IT Parks 11State Bank Reported Earnings 116 llion USD Key Issues Infrastructure Cost SharingThe term Infrastructure Sharing generally refers to the sharing of airtime and/or networkfacilities between one or more operators. The objective of Infrastructure Sharing is to maximize
the use of existing network facilities which can include network capacity and capabilities,existing base station sites, backbone, radio links, and other resources to reduce infrastructureduplication and costs.Infrastructure sharing can take a number of forms. In its simplest form, it can involve the sharingof space on masts and associated buildings or sites. Alternatively, sharing can be more extensivesuch as in 3G infrastructure sharing arrangements that involve two or more operators comingtogether to share various parts of their network infrastructure for purposes of serviceprovisioning. Another variant can also take the form of national roaming where two or moreoperators reach an understanding that their respective subscribers can use each others‟ networkswhen outside the geographical coverage of their home network. Expanding the concept,Infrastructure Sharing can also extend to the co-location of network elements and the sharing offrequency spectrum for wireless-based telecom services.Infrastructure sharing provides practical means to improve country‟s competitive landscape. Itoffers an enormous opportunity to bridge up digital divide in under-developed countries bybringing ICT infrastructure within the reach of population in far flung areas in those countries.The telecommunications infrastructure sector is traditionally characterized by huge fixed, sunkand irreversible investment, often making telecommunications infrastructure investment a highrisk undertaking. This situation is often made more unpredictable by the rapid introduction ofsuccessive generations of new technology. Operators are occasionally faced with a situationwhere even before recouping their investments in existing infrastructure they embark on furtherinvestment in a new generation networks of networks (e.g., migration from 2.5G to 3G). Thesharing of existing or new network infrastructure can promote economic efficiency. It alsoensures that new market entrants are able to compete effectively against existing infrastructureowners offering 3G or competing broadband or mobile services. Many mobile operatorsinternationally are in severe financial problems partly due to the high costs of acquiring licensesin a number of countries, and these operators would certainly welcome the possibility of sharingthe costs of building out the networks. It can prevent wasteful duplication of resources. Inaddition, network sharing can reduce infrastructure cost and consequently the upfront investmentburden thereby enabling competitiveness.
Integration of IT and TelecommunicationThe last few years have seen a major revolution shake the industry. Deregulation has led to intensecompetition – for every customer, every service, and even every call. At the same time, emergingtechnologies like broadband, mobile communications, and the Internet have transformed not onlyservice and product offerings, but the very way business is handled. Integration of IT inTelecommunications provides end-to-end portfolio of solutions, applications, and services tailored tomeet the needs of the telecommunications industry. IT integrates entire telecom business on a coherentplatform, streamlining existing operations and introducing efficient, future-proof business functions. IT’sportfolio for telecom includes an unsurpassed range of industry-specific function, with support forconvergent billing, receivables management, and customer relationship management (CRM). ITintegrated with Telecommunications combines cutting-edge solutions for the telecom markets of todayand tomorrow with industry-specific and general business expertise, helping to grow markets, survivethe struggle, and become a success story.Integration with IT is an important investment in telecommunication companies, delivering a faster andbigger return in a variety of ways: Streamline business processes across the enterprise saving time and money. Take advantage of low total cost of ownership.
Manage customer revenue streams effectively and efficiently. Exploit existing revenue streams to the fullest. Identify and exploit new sources of revenue ahead of the competition. Reduce costs by collaborating over the Web with key business partners. Win new customers in established and new market segments. Increase customer loyalty and revenue per customer by delivering personalized products and services. Achieve greater cost transparency and control. Reduce the number of expensive legacy applications and their interfaces. Overall summary of Pakistan’s ranking in doing business is highlighted in the table below5:APPU – Average Price per User Strategy
Across the world APPU is decreasing and only a very few countries are experiencing upward trends inrevenue growth. Malaysia and France’s revenue is substantially lower than the $15 average, but isexpected to rise through an increased mobile penetration. As compared to Malaysia and France,Germany and Switzerland’s ARPU are touching $30 mark. Country Average Retail Country Average Retail Price Price (US$) (US$) Pakistan 0.03 India 0.06 Bangladesh 0.07 China 0.09 UK 0.41 Sweden 0.17 Czech Republic 0.31 (Source: Tarifica & Mobile Operators)APPU is widely considered to be one of the benchmarks keeping a tab on the financial health of telecomoperators. While globally, operators have an Revenue of around $15, in Pakistan it is decreasing quitedrastically. APPU in Pakistan has decreased from US$ 19.2 in 2002 to less than US$ 3.2 in 20106. Thus ithas been dropping quite severely. The drop was moderate till 2005 but rapid decline has been observedin the last few years. Last year there was 31% decline in the industry APPU and in this year the drop hasARPU (Average price per User) is a powerful and extremely useful indicator of how well a telecomcompany is accessing its customers’ revenue potential. APPU is a measure most often used bytelecommunications companies to state how much money they make from the average user. APPU isimportant because it provides a breakdown of what is driving revenue growth, and it also gives someindications of what is driving margins. APPU growth can also indicate how successful a company is beingin moving users to new services (e.g. pictures messaging, data connections etc.) that are regarded asstrategically important and an indicator of how margins will fare.The company that tracks APPU will most likely want to know its profit potential in broad terms.However, mobile phone companies also track APPU by examining revenues brought in by customers’incoming calls as compared to revenues generated by monthly or annual fees. In this way, APPU can beboth general and specific. Low APPU is a major issue and becomes an impediment to the industrygrowth.
been almost 44%7. Lower ownership costs, lower usage and higher prepaid to postpaid subscriptionratio (98:2) are termed as the main reasons for such a low APPU. The often quoted 60 millionsubscribers figure masks the actual number of individual mobile subscribers in Pakistan. No research-based figures have ever been released, but various sources suggest that the actual number of individualsubscribers in Pakistan today is 25-35 million. So there is a strong case of removing the inactive accountsfor a possible increase in ARPU. In UK, for example, operators actively began to remove accountsinactive for 3 to 6 months and the net effect was an increase in the ARPU and a much sharper focus onprofitable growth.
Evaluation Figuratively:of VOIPMARKET DISTRIBUTION SOLUTIONS:VoIP Service Provider Marketing Solutions: Speak The Customers Language – Do not use tech speak. Keep acronyms to a minimum. If you had to tell a ten year old what it is that your company does, how would you describe it? Don’t Use High Speed or Broadband Internet to Describe an Internet Connection – 90% of consumers do not know what broadband means or if their service is high speed, after all, even dial-up services promote a higher-speed product. Instead, use DSL or Cable to describe the Internet connection necessary to use the service. Sell Devices That Mimic The Traditional Calling Experience – Telephone adaptors, while cheap, add a foreign device to the calling experience. Rather than wasting your time explaining what an analog telephone adaptor does, sell them and cordless IP phone. Customers are familiar with cordless phones and people like things that they are familiar with. It will save the time and headache of explain why you need and ata and how to install it. If you insist on having an ata, make sure you offer one that has PSTN failover, like a Linksys SPA-3102 or Grandstream GS-488. Explain What Happens When Their Internet Connection Goes Down – Do not just make this a bullet point in the fine print. Use it as an opportunity to differentiate yourself from your competition by explaining the issues and making sure your customers have a “back-up” plan
such as a cellular phone or PSTN line for failover. Sure you might lose a customer or two, but the ones you gain will trust you. Trust build loyalty. Loyalty breeds lifetime customers. Show Them More Than Price – If the sole decision was price, then they would have switched year ago. Most non-technical customers needs reasons other than price savings to go through the “hassle” of switching their phone service. Promote the convienence of voicemail to email, how they can use a second number so others can call them for free, educate them on the benefits your features provide them. Do Not Make Switching a Hassle – No one wants a hassle. Make the sign-up process easy, have knowledgeable staff answering your phones, have a number porting system that constantly updates the customer on what stage of the number porting process they are currently in. Make sure devices arrive on time. Make Paper Invoices an Available Option – Believe it or not, many consumers WANT paper bills. Due to their “non-technical” nature, they may not be use to or comfortable with paying bills online. Do not make them do it “your way”, allow them to do it “their way.” Stop Assuming and Start Talking – Stop assuming you know what customers know about Voice over IP. I “thought” I knew what people knew about VoIP, but it wasn’t until I started selling VoIP in a brick and mortar retail environment that I started to “get it.” From there, I actually paid a friend to go out and get people to fill out surveys about their knowledge of VoIP. What I found was that most people know little, are filled with mis-conceptions, and really do not care about VoIP. But do not take my word for it, go out and talk to lots of people about Voice over IP.While it is one thing to identify points that VoIP service providers need to market to, it is anotherthing to execute on them. Execution, after all, is just as important as strategy. These points aremerely a starting point for enhancing the marketing of VoIP service.Distribution:Here is How All This StartedThe whole topic start with a simple question; Who is the largest distributor of VoIP hardware toresellers in the USA. Pretty simple, right? Yes, but I am afraid that the question was never fullyanswered…so here we go!Current VoIP Hardware Distribution ChannelBig Box Distributors – It all starts with the big guys – Ingram Micro, Tech Data, D&H. Theseare the giants who probably touch 80 – 90% of all of the products that end up in the hands of theend user. You have to be a reseller who is doing some serious volumes in order to work withthese guys. For manufacturers, these huge distributors function as glorified warehouses and arecommonly referred to as “box movers”.Specialty Distributor – Right below the big guys are specialty distributors. Specialtydistributors include folks like NetxUSA, ABP, and Target Distribution. These guys are typically“specialists” who offer a small concentrated product line (as compared to the big box guys).When you call them up and ask them a question, they know more then the price and availability.They sell to resellers and because they are smaller. Resellers do not have to do much in terms ofvolume in order to get decent pricing.
Value Added Reseller (VAR)/Value Added Distributor (VAD) – This is where people start toget confused. VAR‟s and VAD‟s purchase products from Big Box or Specialty Distributors andresell the products to end users (what the definition of end user is varies greatly). However,because some resellers grow very large, they are able to sell to other VAR‟s and VAD‟s.Technically it is not supposed to occur, but it does. It is sort of hard to police.*Online Retailers – Online retailers, like VoIP Supply, are technically VAR‟s or VAD‟s whohave an online presence. While traditional VAR‟s/VAD‟s are typically local or regional playerswith “feet on the street”, most online retailers do not (constraints of the business model). Theirvalue add, for many, comes down to ease of ordering, customer service, support and sometimesprice.Service Providers, Integrators, Consultants – I group these three together because more oftenthen not hardware is nothing more then an enabler. They make their money off of service, somany manufacturers classify these folks as “end users” and permit VAR/VAD‟s to sell to themalthough the equipment eventually ends up in the hands of an “end user”. Again, there areexceptions to every rule – many service providers buy direct from the manufacturer or from adistributor because of volume.The “End User” – The end user is the person or company that actually uses the hardware. Theseinclude residential consumers, small medium businesses, enterprise and government/educationalentities. End users will more then likely purchase from Online Retailers, VAR‟s/VAD‟s or ifthey are huge, direct from the manufacturer.So to answer the gentleman‟s question, technically speaking, Ingram Micro is the largestdistributor of VoIP hardware. In reality, though, they only carry a sliver of the VoIP productsthat available. If the gentleman was looking for a VoIP specialist, we would have to furtherdefine what is meant by largest (product lines, employees, revenues). He probably won‟t gowrong with any of the specialty VoIP distributors, or VoIP Supply for that matter.I hope you all enjoyed my little lesson in channel 101. If you have something to add, leave it inthe comments.Competitive OverviewVoIP Service ProvidersIt seems that new VoIP service providers are entering the Canadian market every day.As mentioned above, barriers to entry are very low and the size of the opportunity is significant -fixed line telephony generates roughly $7.5B in revenue annually from the provision of localaccess, calling features and long distance services to consumers.23 This combination ofconditions led industry analyst NBI/Michael Sone Associates to observe that local servicesbased on IP technology have emerged much earlier and much stronger than expected.24 Threetypes of VoIP service are relevant to the residential market: peer-to-peer, access-independent,and access-dependent.
Peer-to-Peer VoIPThis type of VoIP permits individuals to simultaneously use software on their personalcomputers to have a voice conversation over the Internet. Services in this category do notrequire the use of a telephone number, and, in their simplest form, do not provide the ability tomake or receive calls to or from the PSTN. Peer-to-Peer services are often offered by computercompanies like Microsoft and Apple as a free adjunct to their core service, as well as byspecialist companies like Skype. Skype is an interesting example of a company that has achieved enormous success in avery short time. Launched in 2003, Skype is based in Estonia. It has no network of its own butoffers service globally. Skype offers software which is downloaded directly from its website thatallows PC users to have voice conversations over the Internet with any other Skype user in theworld. Not only is the software free, but all such "telephone calls" are also free. As ofAccess-independent VoIPAccess-independent VoIP services piggy-back on a retail broadband Internet connectionenabling the customer to make and receive calls to or from the PSTN and, typically, to and fromother broadband connected users. The residential customers existing broadband Internetconnection - be it from a cable company, incumbent local exchange carrier (ILEC), or other ISP- is used to have voice conversations using a regular telephone equipped with a voice adapter.Access-independent VoIP services are provided by fixed line telephony providers such asRogers Telecom (formerly known as Sprint Canada)29, Primus, Bell Canada and Navigata (asubsidiary of SaskTel), by cable companies such as Askivision Systems Inc, Coopérative decâblodistribution de larrière-pays and Wood Lake Cable and by a variety of VoIP specialists,such as Vonage, AOL and babyTel.Access-dependent VoIP Access-dependent VoIP services provide the ability to make and receive voice calls toand from the PSTN as well as to and from other connected users, and are supplied with anunderlying connection, other than a retail Internet connection, to the service providers network.The access-dependent suppliers in Canada to date are the four largest cable companies -Rogers, Shaw, Vidéotron and Cogeco. These companies are leveraging their existingmonopoly cable networks to offer managed VoIP services. The cable companies use the same cablethat delivers cable television and hi-speed Internet to provide VoIP service. Their offeringpermits a subscriber to use the phone, Internet and cable service at the same time.It is expected that the number of suppliers offering VoIP service will continue to grow inthe near term. For example, there is speculation that Google, the global leader in websearches, will enter the VoIP market:In the longer term, however, some amount of consolidation among VoIP suppliers islikely. Not only is the Canadian market too small to support over 50 telephony suppliers, but aswill be discussed in the next section, cable companies (cablecos) will rapidly capture the leadingshare of VoIP subscribers by bundling their voice services with TV and Internet offerings and insome cases wireless offerings.
Evaluation of VoIP: 2. Merging of Two Worlds Public Switched Telephone Network (PSTN) Traditional telephone service providers Dedicated switches, fiber optics and copper all inter-connected The Internet and Private IP Networks Multitude of high speed networks Dedicated hardware, fiber optics, etc. 3. A Single Medium Where voice, data and video are converted to packets, prioritized and transported concurrently Creating one ‘pipe’ that merges and manages all these applications togetherFigurative Representation: Typical Personal Use VoIP
Executive Summary of Issues:Discussed Points Why Strategic Business Planning is important for VoIP implementation: To Reduce cost To Improve quality To provide best Portability To create and enhance Mobility Technology as an Enabler of Our Strategic PlanOperation plan; Calling card SoftPhone Residential BroadbandIn regards of VoIP we are supposed to focus on international market as per mentioned criteria.But we need to see what could be done in Marketing, Budgeting, management and staffing. Available Budget : 200,000 (USD)Organizational Plan and Personnel Summary
Financial PlanUnderlying Assumptions • VoIP Company, Inc. will have an annual revenue growth rate of 16% per year. • The Owner will acquire $200,000 of debt funds to develop the business. • The loan will have a 10 year term with a 9% interest rate.Sensitivity AnalysisThe Company’s revenues are moderately sensitive to changes in the general economy. VoIP high-speedinternet has become a utility that is comparable to electricity for most residences, and the economy wouldneed a sharp pullback or economic recession before customers cancel their subscription accounts.However, once installed, these systems will become integral for both home and business users, andManagement expects that even an economic recession would not result in a large revenue decline for thebusiness.Source of FundsProfit and Loss Statements