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5/14/2010                       A REPORT                          ON            VALUE ADDED SERVICES (VAS)                ...
Value Added Services at Reliance Communications Ltd.                               A REPORT                               ...
Value Added Services at Reliance Communications Ltd.                        AUTHORIZATIONThis is to certify that the proje...
Value Added Services at Reliance Communications Ltd.                  ACKNOWLEDGEMENTSThrough this report, I take the oppo...
Value Added Services at Reliance Communications Ltd.                                  ABSTRACTIn today’s business environm...
Value Added Services at Reliance Communications Ltd.                     TABLE OF CONTENTSAuthorization                   ...
Value Added Services at Reliance Communications Ltd.8. VAS Promotion                                                      ...
Value Added Services at Reliance Communications Ltd.                 10.4.2 Industry Analysis-Porter’s five forces Model  ...
Value Added Services at Reliance Communications Ltd.  9.9     Retailers Total Footfall                                    ...
Value Added Services at Reliance Communications Ltd.LIST OF TABLESTable no.                                    Description...
Value Added Services at Reliance Communications Ltd.                               1. OBJECTIVEThe project has following o...
Value Added Services at Reliance Communications Ltd.                         2. INTRODUCTION2.1 BACKGROUNDIndia, like many...
Value Added Services at Reliance Communications Ltd.margins of the mobile service providers are expected to decline as the...
Value Added Services at Reliance Communications Ltd.2.3 METHODOLOGYTo achieve the objective of the project following metho...
Value Added Services at Reliance Communications Ltd.   3. Up-Selling VAS through Retail Network & Training to customer tou...
Value Added Services at Reliance Communications Ltd.             3. REVIEW OF LITERATURERNCOS, May 2008, “Indian Telecom A...
Value Added Services at Reliance Communications Ltd. Impact of Increased Competition on Mobile Service Industry:(www.icra....
Value Added Services at Reliance Communications Ltd.Mobile Value Added Services in INDIA:(A Report by IAMAI & eTechnology ...
Value Added Services at Reliance Communications Ltd.                                4. INDUSTRY4.1 INTRODUCTIONThe telecom...
Value Added Services at Reliance Communications Ltd.             Fig 4.1        Source: Operators Website, Press Release &...
Value Added Services at Reliance Communications Ltd.Aimed at raising the economy from low-growth equilibrium and putting i...
Value Added Services at Reliance Communications Ltd.          Fig 4.2   Source: Operators Website, Press Release & Regulat...
Value Added Services at Reliance Communications Ltd.     5. COMPANY PROFILE: RELIANCE        COMMUNICATIONS LIMITED5.1 INT...
Value Added Services at Reliance Communications Ltd.opportunities, and creating a world class working environment. Relianc...
Value Added Services at Reliance Communications Ltd.Reliance Communications leverages its core competencies to create a su...
Value Added Services at Reliance Communications Ltd.             6. VALUE ADDED SERVICES6.1 INTRODUCTIONAs we have seen, T...
Value Added Services at Reliance Communications Ltd.Definition as per TRAIIn the Unified Access Service License (UASL), VA...
Value Added Services at Reliance Communications Ltd.challenge is to develop alternative revenue streams and retain custome...
Value Added Services at Reliance Communications Ltd.   •   Saturation in Metro and Urban Market: The metro/urban areas off...
Value Added Services at Reliance Communications Ltd.       services. The service was first introduced 2 years back and is ...
Value Added Services at Reliance Communications Ltd.                   ENTERTAINMENT              INFORMATION             ...
Value Added Services at Reliance Communications Ltd.6.4 PILLARS OF MVASThe growth of MVAS is based on 4 pillars- Access de...
Value Added Services at Reliance Communications Ltd.   2. ContentIs content really the king? It does not seem so, looking ...
Value Added Services at Reliance Communications Ltd.6.5 UNDERSTANDING THE ROLE OF VARIOUS ENTITIESContent Aggregators/Deve...
Value Added Services at Reliance Communications Ltd.Short Code ProvidersThese are the companies who own a short code (e.g....
Value Added Services at Reliance Communications Ltd.6.6 MOBILE VAS ACCESS MODESThe growth of MVAS market is dependent on t...
Value Added Services at Reliance Communications Ltd.Multimedia Message Service (MMS) PlatformMMS allows sending messages t...
Value Added Services at Reliance Communications Ltd.         7. VALUE ADDED SERVICES (VAS)               MARKET ANALYSIS7....
Value Added Services at Reliance Communications Ltd.GPRS HandsetsCurrently the penetration of GPRS enabled handsets are cl...
Value Added Services at Reliance Communications Ltd.provide a much required boost to it. Given that mobile phones are much...
Value Added Services at Reliance Communications Ltd.Major competitors of Reliance Communications for its Value added servi...
Value Added Services at Reliance Communications Ltd.  FUN ZONE           PICK OF THE         WHATS NEW           HOT n NEW...
Value Added Services at Reliance Communications Ltd.                     separate link for         STORE                  ...
Value Added Services at Reliance Communications Ltd.                                             10   MOVIES              ...
Value Added Services at Reliance Communications Ltd.   united, ESPN                                                BBC wor...
Value Added Services at Reliance Communications Ltd.Here above “X” means: Not AvailableAuditing and Recommendation:After t...
Value Added Services at Reliance Communications Ltd.         8. VALUE ADDED SERVICES (VAS)                   PROMOTION8.1 ...
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  1. 1. 5/14/2010 A REPORT ON VALUE ADDED SERVICES (VAS) At BY: (VANSHAJ ANAND) 09BSHYD0956 RELIANCE COMMUNICATIONS LIMITED 0
  2. 2. Value Added Services at Reliance Communications Ltd. A REPORT ON VALUE ADDED SERVICES (VAS) BY: (VANSHAJ ANAND) 09BSHYD0956 RELIANCE COMMUNICATIONS LIMITED A Report Submitted In Partial Fulfillment of the Requirements of MBA Program of IBS HyderabadDistribution List:Mrs. Chanda Mahajan (Manager –Value Added Services, RelianceCommunications Ltd.)Dr. Manas Ranjan Tripathy (Professor IBS, Hyderabad)Date of submission: 14 May, 2010IBS Hyderabad Page 1
  3. 3. Value Added Services at Reliance Communications Ltd. AUTHORIZATIONThis is to certify that the project report entitled “Value Added Services” is submitted toMarketing department, Reliance Communications Ltd by Mr. Vanshaj Anand in the partialfulfillment of the requirement of MBA program at IBS Hyderabad. This study is a bonafideresearch work carried out by for a period of 14 weeks from 22-02-2010 to 21-05-2010.Date: 14.05.2010 Chanda MahajanPlace: New Delhi (Manager- Value Added Services)IBS Hyderabad Page 2
  4. 4. Value Added Services at Reliance Communications Ltd. ACKNOWLEDGEMENTSThrough this report, I take the opportunity to express my sincere gratitude to all those who havehelped me in making my training at Reliance Communications Ltd. (Delhi circle), a success.First of all I would like to thank the academic fraternity at, IBS Hyderabad, for having such asystem in place, where students are given opportunities to learn about their areas of interest, aspart of training and internship programs.I would like to thank my faculty guide Dr. Manas Ranjan Tripathy, Faculty Member IBS,Hyderabad, without whom it would not been possible for me to undergo training at RelianceCommunications Ltd. His regular guidance and help has given shape to my project and evolvedit to its current being. He has been a source of inspiration and motivated me to perform to thebest of my abilities.I express my deepest sense of gratitude towards Mrs. Chanda Mahajan, my guide and mentor atReliance Communications Ltd, for taking time out of her busy schedule and helping me, in everypossible way, to proceed with my work. She has been a constant help throughout the project andan impartial leader. I would like to thank her for her selfless help and cooperation at every step.At last, I would like to thanks all the TEAM MEMBERS of the office, who had contributed incompletion of the project. I acknowledge their efforts in making me understand the variousbusiness functions at Reliance Communications Ltd and their guidance for developing thedeliverables to the organization.IBS Hyderabad Page 3
  5. 5. Value Added Services at Reliance Communications Ltd. ABSTRACTIn today’s business environment the world is shrinking rapidly. Companies now are not restrictedby boundaries of countries. Technology is the main driving factor behind this emergence of aclosely knit business world. The need for faster communication and decision making is gainingimmense importance. Moreover, easier access to the web has been very effective for thecompany as well as its employees. In this emerging conquest for highly customized products,there has been a growing demand for efficient tools for processing the products and its relateddocuments. All functions – such as sales, marketing, manufacturing, service, and even humanresources affect not only the bottom line but also a company’s financial integrity.The main aim of this project is to understand the various functions of marketing division in theday to day business activities in the telecom sector for its Value Added Services. It also aims toidentify the concern areas after an in-depth analysis of the company’s operations and recommendsolutions for the same. It stresses on analyzing the key aspects of marketing like consumerbehavior patterns and revenue generation. It requires integration of various parameters needed toanalyze the possibilities of market segmentation in telecom sector. It mainly focuses onincreasing ARPU and decreasing customer churn. It also takes a step forward by looking intovarious strategies adopted by Reliance Communications to remain affordable by the customersyet generate high revenue.IBS Hyderabad Page 4
  6. 6. Value Added Services at Reliance Communications Ltd. TABLE OF CONTENTSAuthorization iiiAcknowledgement ivAbstract v1. Objective 102. Introduction 11 2.1 Background 11 2.2 Purpose and Scope 12 2.3 Methodology 133. Review of Literature 154. Industry 18 4.1 Introduction 18 4.2 Market Structure 19 4.3 Competition in the Market 205. Company Profile 22 5.1 Introduction 22 5.2 Vision 24 5.3 Business Mix 246. Value Added Services 25 6.1 Introduction 25 6.2 Need for MVAS 26 6.3 Understanding of Different MVAS Categories 28 6.4 Pillars of MVAS 31 6.5 Understanding Role of Different Entities 33 6.6 MVAS Access Modes 357. VAS Market Analysis 37 7.1 Introduction 37 7.2 VAS Access Devices 37 7.3 Reliance Vs Competitors 39IBS Hyderabad Page 5
  7. 7. Value Added Services at Reliance Communications Ltd.8. VAS Promotion 46 8.1 Introduction 46 8.2 Promotional Strategy Adopted for the Project 48 8.2.1 Campaign Design Through SAS Marketing Automation 48 8.2.2 Tele-Calling 55 8.2.3 Up-Selling 58 8.2.4 Training to Customer Touch Points 609. Market Research for Retail Integration 63 9.1 Research design 63 9.1.1 Type of Research Design 63 9.1.2 Information Needs 63 9.1.2.1 Data collection from secondary sources 63 9.1.2.2 Data collection from primary sources 64 9.1.3 Measurement and scaling procedure 64 9.1.4 Questionnaire development and pretesting 64 9.1.5 Sample design 65 9.1.6 Field Work 66 9.1.7 Data analysis 6610. Market Research to analyze Customer Behavior for VAS 74 10.1 Introduction 74 10.2 Methodology 74 10.3 Research Design 75 10.3.1 Type of Research 75 10.3.2 Information Needs 75 10.3.2.1 Data collection from secondary sources 75 10.3.2.2 Data collection from primary sources 76 10.3.3 Measurement and scaling procedure 76 10.3.4 Questionnaire development and pretesting 76 10.3.5 Sample Design 77 10.3.6 Field Work & Data Collection 78 10.4 Analysis 79 10.4.1 Data Analysis 79IBS Hyderabad Page 6
  8. 8. Value Added Services at Reliance Communications Ltd. 10.4.2 Industry Analysis-Porter’s five forces Model 96 10.4.3 SWOT Analysis 9711. Findings 9812. Conclusion 10113 Recommendations 10314. Annexure 10715. References 10916. Glossary 117LIST OF FIGURESFig. no. Description Page no. 4.1 Top 10 countries by number of subscribers 19 4.2 Market share of all operators in India 21 5.1 Top 10 CDMA operators in the world 23 5.2 Business mix of Reliance ADAG 24 6.1 Pillars of MVAS 31 6.2 VAS Revenue Distribution 34 6.3 VAS Revenue Access Modes 36 7.1 GPRS Penetration 38 8.1 VAS Promotional Strategy Adopted for Project 48 8.2 Strategy for Retail Integration 60 8.3 Steps Devised for Training Customer Touch Points 61 9.1 Total footfall 67 9.2 Retailer’s Knowledge for VAS 67 9.3 Retailers fully aware of VAS 68 9.4 Customers that come enquiring for VAS 68 9.5 Ususal VAS activations 69 9.6 Major VAS service 69 9.7 Retailer will promote if given incentives 70 9.8 Incentive expected 70IBS Hyderabad Page 7
  9. 9. Value Added Services at Reliance Communications Ltd. 9.9 Retailers Total Footfall 71 9.10 Percentage of Reliance Customers Visit per day / Retailer 72 9.11 Growth Opportunity 73 9.12 Awareness amongst retailers 73 10.1 Methodology for research 74 10.2 Respondent’s Age Group 79 10.3 Respondent Occupation 80 10.4 Customer’s Average monthly Bill 81 10.5 Customer’s Average monthly VAS expenditure 82 10.6 Subscriber Type amongst customers 83 10.7 Age & Awareness of value added services Cross tabulation 84 10.8 Occupation & Awareness of value added services Cross tabulation 84 10.9 SPSS output-Scree Plot 92 10.10 Relative importance of factors 95 10.11 Porter’s five forces Model 96 10.12 SWOT Analysis of Reliance Communication Ltd. 97 13.1 Strategy for Creating Awareness 104IBS Hyderabad Page 8
  10. 10. Value Added Services at Reliance Communications Ltd.LIST OF TABLESTable no. Description Page no. 7.1 Data Platform Comparison 44 9.1 Sampling Design 66 9.2 Retailer’s total footfall 71 9.3 Percentage & count of reliance customers 72 10.1 Sampling design 78 10.2 Customer’s age group 79 10.3 customer’s occupation 80 10.4 Customer’s Monthly bill 80 10.5 customer’s monthly VAS expenditure 81 10.6 Network & subscriber type cross tabulation 82 10.7 Age & Awareness of value added services Cross tabulation 83 10.8 Occupation & Awareness of value added services Cross tabulation 84 10.9 VAS Awareness with different age groups 85 10.10 Frequency distribution table for chi square test of Independence 86 10.11 SPSS output-Correlation Matrix for drivers of Value Added Services Customer 87-88 Behavior 10.12 SPSS output -KMO and Barlett’s Test 89 10.13 SPSS output-Eigen values and variance explained 90 10.14 SPSS output-Communalities before and after extraction 91 10.15 SPSS output-Component matrix before rotation 91-92 10.16 SPSS output-Rotated component matrix 93 10.17 Relative Importance of the factors 94-95 11.1 Factors & Variables after data reduction 99 13.1 Recommendation for Data platform 103 13.2 OBD/Tele-Calling calculation 104 13.3 target set example for RMS’s 105IBS Hyderabad Page 9
  11. 11. Value Added Services at Reliance Communications Ltd. 1. OBJECTIVEThe project has following objectives: To understand the significance and benefits of VAS (Value Added Services) in revenue generation. To study and analyze Value Added Services of Reliance and its major competitors, and learn the basics of promotions for VAS. To make recommendations pertaining to improvement of VAS. Up-Selling VAS and its integration with the Retail Network of Reliance Communications. To carry out a market research with the help of a survey and a questionnaire with Reliance retailers and analyze the data to help the organization strategize VAS integration with the retail network. To carry out a market research with the help of a survey and a questionnaire with Reliance customers and analyze the data to help the organization strategize VAS promotions. To make effective use of various management and statistical tools and segment the customer base for effective target and promotion.IBS Hyderabad Page 10
  12. 12. Value Added Services at Reliance Communications Ltd. 2. INTRODUCTION2.1 BACKGROUNDIndia, like many other countries of the world, has adopted a gradual approach to telecom sectorreform through selective privatization and managed competition in different segments of thetelecom market.To begin with, India introduced private competition in value-added services in 1992 followed byopening up of cellular and basic services for local area to private competition. The TelecomRegulatory Authority of India (TRAI) was constituted in 1997 as an independent regulator in thissector. Competition was also introduced in national long distance (NLD) and international longdistance (ILD) telephony at the start of the current decade.Despite asymmetry in initial market endowments between public sector incumbents and privateoperators, the act of opening up of the market unleashed dynamism that was hitherto latent in thesector.Three types of players now exist in Telecom Industry India community - • State owned companies like - BSNL and MTNL. • Private Indian owned companies like - Reliance communications and Tata Teleservices. • Foreign invested companies like – Vodafone, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications etc. The Indian mobile services market is highly competitive with six to eight players operating ineach of the 23 telecom circles that the country is divided into. The intensity of competition hasincreased in recent months following the launch of GSM services by Reliance Communications(RCom) and Tata DoCoMo, CDMA services by Sistema Shyam; and the continuing pan-IndianGSM rollout by Aircel, Idea Cellular (Idea), and Vodafone Essar (Vodafone). The competitiveintensity is expected to increase even further as new licensees launch their services and MobileNumber Portability (MNP) is introduced in India.The recent increase in competition in the Indian mobile services market is evident from theaggressive tariff plans being introduced by players, a move that has led to a decline in theaverage revenue per user (ARPU), revenue growth, and profitability of the industry. Besides,profitability of the mobile service providers is also being impacted by the increasing share of lowARPU subscribers in incremental additions, the bulk of which is happening in the semi-urbanand rural areas where the mobile penetration rates are still low. While India remains one of the fastest growing mobile services markets globally by subscriberaddition and still presents an opportunity for further growth, the rates of revenue growth andIBS Hyderabad Page 11
  13. 13. Value Added Services at Reliance Communications Ltd.margins of the mobile service providers are expected to decline as the intensity of competitionincreases further.Although some of the incumbent operators with strong financials, extensive networks, and largershare of high paying customers would be better positioned to withstand the kind of competitivepressures anticipated, high capital expenditure on 3G may well lead to continued negative freecash flows and push up funding requirements. Intensified competition and the aggressive pricingstrategies adopted by the existing operators could challenge the sustainability of the new entrantsas breaking even at lower tariffs would take longer.This would also imply delay in the generation of positive cash flows for the new entrants. Giventhis scenario, it is likely that the Indian mobile services market would see some consolidationover the medium to long term.2.2 PURPOSE AND SCOPEThe main purpose of this project is to understand the various verticals of marketing function atReliance Communications for its Value Added Services (VAS). An in-depth analysis of the dataplatform and customer base was done based on the primary data available, in order to gaininsights into the consumer behavior patterns. Based on these patterns further studies wereconducted to develop revenue generating models for the company.This project helped me in gaining insights about how a telecom firm is dealing with the existingprice war, declining revenues and increasing competition and the importance of VAS in revenuegeneration. It is an opportunity for me to be a part of the corporate world. Further, it will alsohelp in reaching my objective of understanding and analyzing the telecom industry as a whole.The scope for doing this project is limited to the geographic boundaries of Delhi and NCR andthe data that is available while conducting the studies. The resources available are utilized to theoptimum. It will help me to understand the highly competitive environment and means oftackling the surmounting pressure over the telecom sector.IBS Hyderabad Page 12
  14. 14. Value Added Services at Reliance Communications Ltd.2.3 METHODOLOGYTo achieve the objective of the project following methodology will be used.Research Work • Understanding the work though communication with its employees. • Tele calling customers in order to gain insights into their feedback • Visiting various Reliance mobile stores and reliance world stores to gain feedback • Reading annual reports of company and its competitors. • Reading papers published by ICRA, IMRB and other market research firms, on industry analysis of telecom sector. 1. VAS Market Analyses • Understanding the project through communication with its employees. • Learning about the VAS products and services by going through R-world i.e. the Data Platform of Reliance/ Voice Portal/ CRBT and SMS- services, to know and understand the product. • Comparison with other operators regarding their Data Platform and Voice Portal. 2. VAS Promotion • Out Bound Dialing (OBD) and Message promotion to customer’s MDN i.e. creating a SMS Blast. • Segregating various customers on basis of their current balance and promote accordingly, for which queries are run on Microsoft Access and respective MDN’s are retained for OBD and Promotional Messages. • Going through daily customer base for in-bound and out-bound calls and check the conversion rate. • Designing campaigns on statistical analyses software i.e. SAS Marketing Automation, for promotional messages. • Visit INDIA Calling which is the Reliance Communication’s approved Tele-calling agency and check the work flow and help improve efficiency and effectiveness of contactibility of customers and promote VAS more effectively to increase the conversion percentage.IBS Hyderabad Page 13
  15. 15. Value Added Services at Reliance Communications Ltd. 3. Up-Selling VAS through Retail Network & Training to customer touch points for promotion of VAS • Field work which involves visiting various locations under each cluster, all around the city and communicate with RMS’s and RW’s. • Visiting various sales channels and motivate them to push for sales and help with any of their queries regarding VAS. • RETAIL Integration: Reaching the retail network and integrating it with VAS and introduce sales through this retail network, motivating them through various incentives. Initialize the process with a survey research and analyze the retailer’s behavior followed by the launch of e-Retailer. • Training to Customer Touch Points for promotion of VAS and hence increase the sales. It involves setting up a training program for all the customer touch points at the head office (Delhi circle) and train them about VAS through presentations and discussions and push them for sales and revenue generation through VAS. • Field visits to various channels and collecting feedback, report the Head Office. This helps in keeping a track of where the project is heading through the retail channel. 4. Market Research to analyze Customer Behavior regarding VAS • Designing of the questionnaire aiming at the awareness, liking and usage of Value Added Services by Reliance subscribers. • Getting the questionnaire filled by the customers and take their feedback. • Analyzing the data collected using Statistical tool SPSS 13.0 for Windows. • Report preparation.IBS Hyderabad Page 14
  16. 16. Value Added Services at Reliance Communications Ltd. 3. REVIEW OF LITERATURERNCOS, May 2008, “Indian Telecom Analysis (2008-2012)”(www.research and markets.com)The report provides a detailed study of the Indian telecom sector and gives an analysis of thecompetitive environment in the industry. It gives an insight into the fixed, mobile, Internet andbroadband services in terms of players, number of subscribers, and market share in India. Thereport also discusses the growth drivers, opportunities, and future outlook of the Indian telecomsector to help clients identify growth opportunities in the market.With a strong population of over 1.1 Billion, India has become one of the most dynamic andpromising telecom markets of the world. In recent times, the country has emerged as one of thefastest growing telecom markets in the world. During 2003-2007, the country witnessed thenumber of phones increasing more than triple and total tele-density rising from 5.1% to 18.2%.The major key findings from this report are as follows: • The total telecom subscription in India surged at a CAGR of over 38% from fiscal 2003 to fiscal 2007, making the country the third largest telecom market in the world. • Mobile phones accounted for 80.2% of the total telephone subscriber base at the end of March 2007. • The Internet subscriber base in the country, as on March 31, 2007, stood at 9.3 Million as compared to 6.9 Million on March 31, 2006 registering a growth of 34.8%. • By fiscal 2010, Indian will require around 330,000 telecom network towers. To meet this enormous need, the telecom operators are resorting to network infrastructuresharing.The major key issues & facts analyzed are as follows: • The current scenario of the Indian telecom sector. • The factors critical to the success of the industry. • The opportunities exist for the Indian telecom market. • The future outlook of the telecom market in India. • The emerging technologies in the Indian telecom sector. • The major players in the Indian telecom market and how are they performing.IBS Hyderabad Page 15
  17. 17. Value Added Services at Reliance Communications Ltd. Impact of Increased Competition on Mobile Service Industry:(www.icra.in)The report provides an overview of the financials of the telecom industry and various players inthe Indian telecom sector. It gives a detailed analysis of the competition prevalent in the Indiantelecom industry. It summarizes the reasons for declining revenues, increasing price war,increasing rate of customer attrition and also the importance of value added services for mobileservice providers.The facts that the report presents are as follows: • The Indian mobile services market is highly competitive with six to eight players operating in each of the 23 telecom circles that the country is divided into. • Most telecom operators reported a decline in revenues from mobile services in Q2, 2009- 10 despite growth in their mobile subscriber base. • With mobile penetration in the urban areas having reached high levels already (urban tele-density was 87.18% as against rural tele-density of 15.35%, both as in June 2009), subscriber additions are expected to happen largely in the semi-urban and rural areas, which in turn would impact ARPU further. • With TRAI recommending introduction of MNP, the domestic telecom sector appears poised for a paradigm shift. The reasons for seeking the introduction of MNP are compelling: to promote competition among mobile service operators so that service levels can improve further and to provide users the right to change operators at minimal cost and with minimal inconvenience. • Currently, the contribution of VAS to the total mobile revenues of Indian telecom operators is just 9-10%, which is significantly lower than the same of operators in the developed markets.IBS Hyderabad Page 16
  18. 18. Value Added Services at Reliance Communications Ltd.Mobile Value Added Services in INDIA:(A Report by IAMAI & eTechnology group @ IMRB)The report provides a clear and precise definition of MVAS, its various categories existing inIndia, the MVAS still evolving and thus changing ecosystem along with the current revenuesharing scheme between various entities, its drivers and barriers along with its future in India.The facts that the report presents are as follows: • The Current Mobile VAS industry is estimated at Rs. 5780 crore by end June 2008 and is estimated to grow steadily at 70% over the next two years to touch Rs. 9760 crores by end June 2009 and Rs.16520 crores by end June 2010. • MVAS currently contributes around 9% to the operator’s revenue. It is expected to grow over 12 % by June 2010. • As ARPU declines, the challenge for operators is to increase revenues by differentiating their offerings and develop alternative revenue streams by offering more value added services to the existing subscribers. • In terms of market share, 92% of the subscriber base in India is on pre-paid connection, with the remaining 8% on post-paid subscriptions. This has also given rise to opportunities for generating increased revenue, through exploring potential Value Added Services (MVAS) like subscription packs of news, alerts etc and more exclusive roaming services tailored to pre-paid subscribers. • Decrease in ARPU despite increase in MOU: Though the subscriber base is growing at a rapid pace and has positively impacted industry revenues, operator margins also have shrunk owing to competition and lower “Average Revenue per User” (ARPU) as the major growth is coming from bottom of the pyramid. As ARPU declines and voice gets commoditized, the challenge is to develop alternative revenue streams and retain customers by creating a basis for differentiation in high-churn markets. • Need for differentiation: There is a greater need among the telecom operators to differentiate themselves from each other.IBS Hyderabad Page 17
  19. 19. Value Added Services at Reliance Communications Ltd. 4. INDUSTRY4.1 INTRODUCTIONThe telecom industry is one of the fastest growing industries in India. India has nearly 200million telephone lines making it the third largest network in the world after China and USA.With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world.History of Indian Telecommunications started in 1851 when the first operational land lines werelaid by the government near Calcutta (seat of British power).Telephone services were introduced in India in 1881. In 1883 telephone services were mergedwith the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. Afterindependence in 1947, all the foreign telecommunication companies were nationalized to formthe Posts, Telephone and Telegraph (PTT), a monopoly run by the governments Ministry ofCommunications. Telecom sector was considered as a strategic service and the governmentconsidered it best to bring under states control.In 1986, two wholly government-owned companies were created: the Videsh Sanchar NigamLimited (VSNL) for international telecommunications and Mahanagar Telephone NigamLimited (MTNL) for service in metropolitan areas.Telecommunication sector in India can be divided into two segments: Fixed Service Provider(FSPs), and Cellular Services. Fixed line services consist of basic services, national or domesticlong distance and international long distance services. The state operators (BSNL and MTNL),account for almost 90 per cent of revenues from basic services. Private sector services arepresently available in selective urban areas, and collectively account for less than 5 per cent ofsubscriptions. Cellular services can be further divided into two categories: Global System forMobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sectoris dominated by Airtel, Vodafone-Hutch, and Idea Cellular, while the CDMA sector isdominated by Reliance Communications and Tata Indicom. Opening up of international anddomestic long distance telephony services are the major growth drivers for cellular industry.India surpasses the USA as the world’s second largest mobile market. The last five years havewitnessed the number of phones more than quadruple in India, taking the total number to 300.5million at the end of March 2008. 73.7% of the country’s mobile customers are subscribed toGSM and the remainders are CDMA customers.Mobile growth is forecasted to remain in the double digits until the end of the forecasted period,with an average growth rate of 22.8% between 2007 and the end of 2012. At that time, mobilesubscribers are forecasted to have reached 643.0 million and a penetration rate of 51.8%.Withover 1.1 billion inhabitants and a highly competitive telecom market, India is and will remainone of the world’s most dynamic and promising telecom markets for the next five years, evensurpassing China in terms of market vitality.IBS Hyderabad Page 18
  20. 20. Value Added Services at Reliance Communications Ltd. Fig 4.1 Source: Operators Website, Press Release & Regulatory4.2 MARKET STRUCTURETelecom reforms across the world are energizing businesses and people. Long considered anatural monopoly, recent technological developments have facilitated competition in this sectorleading to increased access to telecom services and gains in efficiency and quality of service.India has emerged as an international destination for processing and distribution of information.Availability of infrastructure for electronically transferring and assessing information are criticalto maintaining the competitive advantage that it currently enjoys and embracing telecom reformsis a part of achieving that goal. Though the results of telecom reforms the world over have beenpositive on average; domestic political economy and institutions have impacted every countryexperience and India is no exception. India’s economic liberalization program began in 1991.IBS Hyderabad Page 19
  21. 21. Value Added Services at Reliance Communications Ltd.Aimed at raising the economy from low-growth equilibrium and putting it on a sustained growthpath, these reforms targeted a wide range of sectors – from international trade to finance andinfrastructure. Following these reforms, traditional sectors such as agriculture and industry thatused to contribute nearly 70 per cent of the GDP now constitute an increasingly smaller share ofeconomic output.Simultaneously, there has been rapid growth in the service sector that now contributes nearly 48per cent to GDP (1998) and is growing at 8 per cent per annum. Indian policy-makers alsoincreasingly recognized the need for reforms and investment in telecommunication infrastructurein order to realize the forecasted economic and social growth rate of the country. It has beenshown that investment in telecommunications infrastructure leads to economic growth in variousways. While telecommunication investment itself leads to growth by creating a demand for thegoods and services used in their production, the economic returns on this investment are fargreater than the returns from the investment alone. The multiplier effect of telecom investmenton GDP is likely to be higher because of both the direct and indirect effect that this investmenthas on production.However, it has also been shown that since telecommunications infrastructure is characterized bynetwork externalities the positive growth effects of investment in this sector are subject to havingachieved a critical mass in a given country’s communications infrastructure.4.3 COMPETITION IN THE MARKETA characteristic of telecom industry is heavy dependency on Advertisement and PromotionalStrategies-Each company viz. Airtel, Vodafone, Reliance Communications, Tata Indicom andAircel spend lots of funds on acquiring Indian movie stars and sport stars. Thus due to the cost ofheavy expenditure on Advertisement the industry is more or less a very heavy revenuegenerating industry for a lot of other sectors. A characteristic of this kind of Competition is theclose interdependence between the different companies regarding each company’s policydecisions. These companies have to monitor each activity of its competitors and even a littleignorance can prove very costly. Like, when Reliance started the ONE-INDIA plan, Airtel,Vodafone and others also started and pushed similar plans. In this kind of competition the majorplayers occupy a very high market share and these players could dictate terms for the otherplayers but in Indian Telecom Industry all the players are very close in terms of market share sothe question of dictating terms comes only when a company takes the First-mover Advantage.Then it could dictate terms for the particular time period but again the other companies arealways at their heels so the question of keeping the advantage for a long time doesn’t seek in.IBS Hyderabad Page 20
  22. 22. Value Added Services at Reliance Communications Ltd. Fig 4.2 Source: Operators Website, Press Release & RegulatoryIBS Hyderabad Page 21
  23. 23. Value Added Services at Reliance Communications Ltd. 5. COMPANY PROFILE: RELIANCE COMMUNICATIONS LIMITED5.1 INTRODUCTIONReliance Communications Limited founded by the late Shri Dhirubhai H Ambani (1932-2002) isthe flagship company of the Reliance Anil Dhirubhai Ambani Group. The Reliance AnilDhirubhai Ambani Group currently has a net worth in excess of Rs. 63000 crore, cash flows ofRs. 12000 crore, net profit of Rs. 8000 crore and zero net debt. RCOM is India’s largest integrated and fully converged communications service provider in theprivate sector, and has been rated among “Asia’s Top 5 Most Valuable Telecom Companies”.Reliance Communications is Indias foremost and truly integrated telecommunications serviceprovider. The Company, with a customer base of over 100 million including over 2 millionindividual overseas retail customers, ranks 4th among the Top 10 Telecom companies in theworld by number of customers in a single country.Reliance Communications corporate clientele includes 2,100 Indian and multinationalcorporations, and over 800 global, regional and domestic carriers. Reliance Communications hasestablished a pan-India, next generation, integrated (wireless and wireline), convergent (voice,data and video) digital network that is capable of supporting best of- class services spanning theentire communications value chain, covering over 20,000 towns and 450,000 villages.It owns and operates the worlds largest next generation IP enabled connectivity infrastructure,comprising over 175,000 kilometers of fiber optic cable systems in India, USA, Europe, MiddleEast and the Asia Pacific region. The Reliance Communications network consists of 60,000kilometers of optical fiber cables spanning the length and breadth of India. These cables cancarry thousands of billions of bits per second and can instantly connect one part of the countrywith another.This physical network and its associated infrastructure will cover over 600 cities and towns in 18of the countrys 21 circles, 229 of the nation’s 323 Long Distance Charging Areas and broadbandconnectivity to over 190 cities. This infrastructure will be backed by state-of-the-art informationmanagement systems and a customer-focused organization. Reliance Communications objectiveis to create value for our customers. Reliance will innovate ceaselessly so that state-of-the-arttechnology can be leveraged to create products and services that are affordable. Reliance has ademonstrated track record of conceptualizing, and executing complex, multi-billion dollarprojects in a timely and cost effective manner. Reliance Communications is committed todelivering products and services of world class quality to customers. It has attracted the bestpeople in each of its businesses, by empowering people, providing attractive growthIBS Hyderabad Page 22
  24. 24. Value Added Services at Reliance Communications Ltd.opportunities, and creating a world class working environment. Reliance Communicationsbelieves that knowledge resides in people, and has, accordingly, always built its growth plansaround people. It is a youthful enterprise, with a strong entrepreneurial spirit, fostering anenvironment that facilitates informality and flexibility, and emphasizes depth of planning andspeed of execution. Fig 5.1 Source: Operators Website, Press Release & RegulatoryThe following attributes define future leadership at Reliance Communications: • Customer centricity. • Initiative and an attitude of ownership. • Passion for excellence and an ability to energize. • Problem solving and an innovative "can do" mindset. • Entrepreneurship and stretch.The strong underlying fundamentals of the Indian economy, and the latent demand potential inour markets, provide the platform for building world scale businesses. Reliance Communicationsleadership in its several businesses is centered around its ability to build world scale assets,obtaining the benefits of economies of scale, and competing on an even level with the globalpeer group.IBS Hyderabad Page 23
  25. 25. Value Added Services at Reliance Communications Ltd.Reliance Communications leverages its core competencies to create a sustainable competitiveadvantage in its various businesses. Today, Reliance Communications is revolutionizing the wayIndia communicates and networks, truly bringing about a new way of life.5.2 VISIONReliance Communications has a vision to leverage its strengths to execute complex global-scaleprojects to facilitate leading-edge information and communication services affordable to allindividual consumers and businesses in India. It also aims to offer unparalleled value to createcustomer delight and enhance business productivity. It also focuses on generating value for theircapabilities beyond Indian borders and thus enabling millions of Indias knowledge workers todeliver their services globally.5.3 BUSINESS MIX Fig 5.2 Source: Annual Report of Reliance Communications, 2007-2008IBS Hyderabad Page 24
  26. 26. Value Added Services at Reliance Communications Ltd. 6. VALUE ADDED SERVICES6.1 INTRODUCTIONAs we have seen, Telecommunication has moved beyond providing just basic voice calls. Themobile phone has evolved from a mere communication device to an access mode with an abilityto tap a plethora of information and services available in the ecosystem. This is the reason why itis now being referred to as the ‘fourth screen’, after Cinema halls, Television and PC.Defining VASBut the fundamental question that remains is how VAS is defined. A clear MVAS definition isnot only required to clear the air among the MVAS providers but it will also have an impact onthe dynamics of the Value chain. A detailed definition of VAS might have an impact on thelicensing issues surrounding VAS.Let’s look at different VAS definitions floating in the market.Basic definition of a VASValue Added Service (VAS) in telecommunication industry refers to non-core services, the coreor basic services being standard voice calls and fax transmission including bearer services. Thevalue added services are characterized as under:- • Not a form of core or basic service but adds value in total service offering. • Stands alone in terms of profitability and also stimulates incremental demand for core or basic services • Can sometimes be provided as stand alone. • Do not cannibalize core or basic service. • Can be add-on to core or basic service and as such can be sold at premium price. • May provide operational synergy with core or basic services.A value added service may demonstrate one or more of these characteristics and not necessarilyall of them. In some cases, the value added service becomes so closely integrated with the basicoffering that neither the user nor the provider acknowledge or realize the difference. A classicexample is of P2P SMS. Some of the operators do not consider P2P SMS as part of their VASrevenue.IBS Hyderabad Page 25
  27. 27. Value Added Services at Reliance Communications Ltd.Definition as per TRAIIn the Unified Access Service License (UASL), VAS is defined as follows-“Value Added Services are enhanced services which add value to the basic teleservices andbearer services for which separate licence are issued”The Government of India issues licenses for the following Value Added Services:-1. Public mobile trunking service2. Voice mail service3. Closed users group domestic 64 kbps data network via INSAT satellites system4. Videotex service5. GMPCS6. Internet7. Audiotex8. Unified messaging serviceThe above definition supports a free market but can be broadened to incorporate new servicecategories andplayers in the supply chain.For mobile telecommunication market, a simple definition of VAS would be-Mobile Value Added Services are those services that are not part of the basicvoice offer and are availed separately by the end user. They are used as a tool fordifferentiation and allow mobile operators to develop another stream of revenue.6.2 NEED FOR MVASOver the last 5 years, the telecom industry has understood the importance of MVAS. Given thedeclining ARPU and increasing competition among operators it’s imperative to focus onalternate revenue streams. That’s where there is a felt need for capitalizing on the Value AddedServices Market.The reasons for the increasing importance of MVAS can be classified as:• Decrease in ARPU despite increase in MOU: Though the subscriber base is growing at arapid pace and has positively impacted industry revenues, operator margins also have shrunkowing to competition and lower “Average Revenue per User” (ARPU) as the major growth iscoming from bottom of the pyramid. As ARPU declines and voice gets commoditized, theIBS Hyderabad Page 26
  28. 28. Value Added Services at Reliance Communications Ltd.challenge is to develop alternative revenue streams and retain customers by creating a basis fordifferentiation in high-churn markets.• Need for differentiation: There is a greater need among the telecom operators to differentiatethemselves from each other. • Number of Licensees: With increasing number of licensees (98 UASL, and 37 cellular licenses) in the telecom space the average numbers of operators in many circles have increased to 5-6 operators offering more choices to the consumer. Thus the competition among the operators has increased tremendously. Therefore it is very important for them to differentiate themselves from the others. Now that voice has got commoditized these operators are using MVAS for their differentiation and marketing these services heavily for creating awareness among the consumers. • Decreasing Call Rates: In order to attract consumers with relatively low purchasing powers primarily from Semi Urban and Rural India the operators have drastically reduced the call rates making it affordable to even the lower segment of society. The tariff in India is one of the lowest at Rs.1 per minute as compared to the tariff in developed nations like USA and UK where the call rates are Rs.13 and Rs7-8 respectively. Country Tariff Charges (approx.) USA Rs 13 per min UK Rs 7-8 per min France Rs 7-8 per min Brazil Rs 6 per min India Rs 1 per 2 min Table 6.1 Source: Broadband and Internet India • 3G bidders who are non operators: The arrival of new technologies will give rise to greater competition as many non operators are also bidding for the 3G licenses. Department of Telecom has planned to allow five 3G operators in each circle depending on the availability of spectrum. Therefore there would be a greater need to differentiate one self in order to attract new customers and retain the existing ones.IBS Hyderabad Page 27
  29. 29. Value Added Services at Reliance Communications Ltd. • Saturation in Metro and Urban Market: The metro/urban areas offer high level of penetration and have significant mobile subscribers. In such a highly saturated market with the entry of MVNO’s the competition will get fierce. Therefore capitalizing on value added services will give operators opportunity to increase ARPU by providing premium services. Metro Circle Mobile Penetration Delhi 90% Mumbai 70% Chennai 89% Kolkata 47% Punjab 46% Table 6.2 Source: Broadband and Internet India • Increasing need and demand from consumers: In addition to the above supply side reasons the ‘pull effect’ from consumers asking for more than just basic telephony is also a key driver for MVAS services. Today most of the consumers are seeking more from their communication device apart from just mobility and desire to stay connected.6.3 UNDERSTANDING DIFFERENT MVAS CATEGORIESAll the value added services address some need of the end consumer whether it is psychological,monetary or convenience. Based on the need fulfillment of the end user, we have groupedMobile VAS into three broad categories. • Entertainment VAS - The key differentiating factor of Entertainment VAS is the mass appeal it generates. These provide entertainment for leisure time usage. These not only generate heavy volume (owing to its mass appeal) but also heavy usage. An example of these kinds of services is Jokes, Bollywood Ringtones, CRBT (Caller Ring Back Tone) and games. These services continue to be popular and have been key revenue generators for the Indian mobile VAS market. This is a high value MVAS and will continue to show growth. Other popular Entertainment VAS driving the market are dating and chattingIBS Hyderabad Page 28
  30. 30. Value Added Services at Reliance Communications Ltd. services. The service was first introduced 2 years back and is now being offered by all the operators. Each circle generates about Rs 30 lakhs per month. This service is not only growing fast but also witnessing less churn as compared to other MVAS. Owing to its sticky nature, it requires comparatively less marketing efforts and cost. Entertainment VAS has the potential to remain a key contributor to Mobile VAS industry. To sustain the MVAS growth, it is the responsibility of the industry to keep discovering/innovating killer applications like CRBT (Caller Ring Back Tone) at regular intervals • Info VAS- These services are characterized by the useful information it provides to the end user. The user interest comes in from the personal component and relevance of the content. Apart from mobile, alternate modes are available to access Information VAS like Newspaper, TV, and Internet. E.g. of Info VAS is information on movie tickets, news, banking account etc. They also include user request for information on other product categories like real-estate, education, stock updates, etc. Information VAS needs to target the right person at the right time with the right content. • mCommerce VAS (Transactional services)- These are the services which involve some transaction using the mobile phone. An example of this kind of service is buying movie tickets using mobile phone or transfer of money from one bank account to the other. These can broadly be classified into 2 types - Mobile banking and Mobile payments. Though in a nascent stage, off late many initiative have been taken in mCommerce space. A number of application providers are in the market with different business models. Some are focusing on mpayment, some on incorporating mCommerce into it while others on mbanking aspects. This year has seen the launch of mbanking service by Indian’s largest private sector bank which has given mbanking a much needed thrust. Almost all the operators are conducting pilot exercises for mCommerce services using different access modes like GPRS, USSD, STK, etc. A big boost to mcommerce has come from the RBI which recently came out with some guidelines. mCommerce penetration continues to be small but awareness is increasing. Operators are betting on technologies like USSD to make the service handset agnostic. The current marketing focus is primarily on mobile bill payment and mbanking. Industry is betting on tripling number of mCommerce users within this year. This is discussed in greater detail in the subsequent sections.IBS Hyderabad Page 29
  31. 31. Value Added Services at Reliance Communications Ltd. ENTERTAINMENT INFORMATION MCOMMERCE VAS VAS These are the services These services provide which provide some These are the services entertainment foe useful information to which involve some Definition leisure time. These the end user. The user transaction on mobile. services usually interest comes from generate mass appeal. personal or relevant component of the content. Entertainment VAS is Information VAS is mCommerce is driving the VAS market getting popular with currently in embryonic Current Status both in terms of different categories stage. volume and revenue. depending on the relevance. Industry focus is on Entities using mobile as RBI guidelines are Entertainment VAS another channel to expected to give a big with new players deliver information is boost to mBanking. coming from media and driving Information Drivers movie houses. Eg: VAS. Eg: Stock update, STAR, Rajshri. bank account information etc. Currently, music is the 1. Marketing is the 1. Identifying the best biggest component. biggest challenge access mode for Challenge is to drive since information mCommerce is the the other content and need differs across biggest challenge. services like games. different segments. 2. Handset 2. Credibility of the penetration and source is another usage of GPRS is challenge since low in India. Challenges there are various 3. Security concerns. other alternative sources for Information VAS. It is expected to remain It is going to be key to It has the potential to the VAS driver for next address the needs of become one of the key Future Status few years. growing rural market. drivers of VAS once the security concerns are addressed. Table 6.3: Different MVAS categoriesIBS Hyderabad Page 30
  32. 32. Value Added Services at Reliance Communications Ltd.6.4 PILLARS OF MVASThe growth of MVAS is based on 4 pillars- Access devices, Content, Technology andInfrastructure. Fig. 6.1 Source: Mobile Value Added Services in INDIA: (A Report by IAMAI & eTechnology group @ IMRB) 1. Access devicesAccess devices play an important role in the usage of different MVAS categories. The lack offeatures like GPRS, GPS, Java in handsets make a number of MVAS futile. Therefore theaffordable availability of such features is a key factor in determining the size of the targetaudience to a large extent. A recent example is service operators preference for USSD as anmpayment mode instead of GPRS for the simple reason that USSD is handset agnostic. Anotheraccess device which will soon see the light-of-the-day in India is MID (Mobile Internet Devices).Even technology companies like Intel are increasing the power of mobile platforms with aspecially designed low cost processor called Atom.IBS Hyderabad Page 31
  33. 33. Value Added Services at Reliance Communications Ltd. 2. ContentIs content really the king? It does not seem so, looking at the percentage revenue share collectedby Content aggregators and Content owners of the total MVAS pie. Add to it the pirated contentand side loading in the India market; it does not present a rosy picture. The content depends a loton geography and is not transportable across borders. Both IPR (e.g. music label) and white labelcontent (e.g. cricket) is available in the market. But on the other hand, much of the content beingconsumed is being generated for other media. But because of the same reason we say a widevariety of content being available especially in the Entertainment category. For contentaggregators/developers/owners to play a significant role in the category, relevant content needsto be generated. They need to play a larger role from merely being a content aggregator andtransporter. Investment needs to be made keeping in mind the long term benefit and not the shortterm ROI. Another factor which impedes the content development is marketing of MVAS. A lotof content and services die prematurely or do not realize their full potential because of lack ofsufficient and focused marketing efforts. Currently, packaging and marketing of content isprimarily in the hand of operators. The stakeholders are currently not sharing the burden againciting reasons of lack of sufficient returns. Regional content will give a boost to the MVASmarket. It has tasted success in the Indian market but the challenge is to generate relevant contentnot only catering to regional differences but also in different languages. 3. InfrastructureInfrastructure requirement needs to be met to harness the potential of different technologies.Setting up infrastructure especially in the rural areas is going to play a major role in the growthof MVAS. 4. TechnologyThere are 2 aspects to technology. One is the technology platform itself and the second is thecommunicationtechnology.On one hand technology platforms are independent of geography and are transportable acrossborders unlike content which needs to have a regional flavor for e.g. mobile payment platform,IVR, etc. Though there are challenges in case of platforms like speech recognition given the highnumber of languages and dialects spoken in India. Communication technology is alsoindependent of geography but depends on regulation issues for e.g. 3GIBS Hyderabad Page 32
  34. 34. Value Added Services at Reliance Communications Ltd.6.5 UNDERSTANDING THE ROLE OF VARIOUS ENTITIESContent Aggregators/Developers:The MVAS growth has given birth to a new entity which aggregates content originally designedfor some other media, from different sources. Some of the content aggregators also developcontent especially for mobile phones for e.g. mobile games. On one hand they coordinate withoperators and on the other, with content owners and smaller aggregators. Another key roleplayed by them is handling of the IPR related issues - thus reducing the burden of the mobileoperators.Content OwnersThese are the actual owners of the content who hold the copyright of the same. Though thecontent is developed for some other media, the MVAS has started contributing significantly totheir overall revenue generation. A good example is of CRBT which is giving good revenue tothe music labels. They mostly provide content to Content Aggregators but also some timesinteract directly with the operators. In recent cases, Content owners sell the content directly tohandset manufacturers for e.g. Nokia tied up with Om Shanti Om providing exclusive songs,wallpapers, games, etc.Traditional Media CompaniesMedia companies like TV channels and FM channels have also joined the bandwagon. All thebig TV channels have started selling their content through short codes. STAR has even launcheda mobile division named STAR Mobile Entertainment to provide mobisodes and mobile relatedcontent. The key revenue source for the media channels is Voting in shows like Indian Idol andcontest participation in shows like Paanchvi Paas. Post the success of talent hunt shows andcontests like KBC, the TV slots have been flooded with such shows and other reality shows.Though the initial euphoria has not sustained, voting and contest participation continue tocontribute significantly.Technology EnablersTechnology partner & platform enablers handle software platforms and authoring tools. Thusthey provide the backbone to all the MVAS being provided. The technology backend includesolutions like Televoting system, Voice portal, etc.IBS Hyderabad Page 33
  35. 35. Value Added Services at Reliance Communications Ltd.Short Code ProvidersThese are the companies who own a short code (e.g. 58888, 53456 etc) which is sold to a thirdparty client for some keyword and a specific period. On one hand they need to tie up with theoperators to ensure their short code works across subscriber base and on the other hand they selltheir short code to other companies like real estate, hospitals, etc. who advertise their productsusing the short code.Handset manufacturerThe handset manufacturers have joined the bandwagon and have started tying up with Contentowners to provide pre loaded content on their handsets.Content converterSince most of the content in MVAS is originally designed for some other media, it needs to beconverted into mobile compatible format. This is where content converters enter the value chain.They interact with the operators and work closely with them. Fig. 6.2 Source: Mobile Value Added Services in INDIA: (A Report by IAMAI & eTechnology group @ IMRB)IBS Hyderabad Page 34
  36. 36. Value Added Services at Reliance Communications Ltd.6.6 MOBILE VAS ACCESS MODESThe growth of MVAS market is dependent on the various modes available to the end consumerfor accessing MVAS. Presently, the modes of MVAS access can be classified as:Short Message Service (SMS) PlatformSMS was the first mode introduced for accessing MVAS. MVAS market is currently dominatedby SMS in terms of revenue. The SMS platform is used by telecom operators to provide a varietyof services such as information services like news alerts, cricket scores, chatting services, etc.Voice PlatformInteractive Voice Response (IVR) system is used to deliver Voice based Value Added services tothe consumers. In this system, the end user interacts with a computerised system to tap theservice. The end users can select the options available on the service either through numbers onthe keypad or using speech recognition system. Voice based services are offered in a variety oflanguages to cater to the diversified Indian population. This mode becomes more significantwhen dealing with the non-metros and rural India. Voice access contributes to more than one-third of the total MVAS revenueGPRS/WAP PlatformGPRS currently contributes around 6-7% of the overall MVAS revenue. The high price of dataaccess acts as a barrier towards usage of GPRS. The primary drivers for the adoption and usageof mobile internet are availability of cheap data-enabled handsets and lowering of GPRS tariff bymobile operators. GPRS is an effective medium of accessing MVAS, but is restricted byrelatively lower consumer base.Unstructured Supplementary Services Data (USSD) PlatformUSSD is a session based mechanism for delivery of service to the end consumer. The servicesare delivered through a continuous interactive session, unlike SMS where the interaction needs tobroken to separate messages. USSD presently contributes around 2-3% of the MVAS revenues,but the industry holds a positive perspective towards its adoption as a means of accessingMVAS.IBS Hyderabad Page 35
  37. 37. Value Added Services at Reliance Communications Ltd.Multimedia Message Service (MMS) PlatformMMS allows sending messages that include sending multimedia objects such as images, audioand video along with text messages. MMS market in India is still in a nascent stage. Presently,the growth of this segment is restrained by high-price and limited availability of MMS handsetsin India. The current MVAS market is estimated at Rs 5930 crore as on June 2008. The market iscurrently dominated by SMS as the mode of accessing MVAS.SMS contributes around 49% to the overall MVAS revenues. This consists of P2P, A2Pand P2A services. Fig.6.3: VAS Revenue Access ModesIBS Hyderabad Page 36
  38. 38. Value Added Services at Reliance Communications Ltd. 7. VALUE ADDED SERVICES (VAS) MARKET ANALYSIS7.1 INTRODUCTIONThe goal of market analyses is to determine the attractiveness of a market and to understand itsevolving opportunities and threats and relate it to the strengths and weaknesses of the firm and itsproduct/service.First task is always to know all about your field of work, the market for which the product ismeant, the technology involved and your product itself. Before setting my feet into thedepartment and extending my work responsibilities, my first job is to know everything about theproduct, its market and services offered through VAS in Reliance.Under the initial step of market analyses, following are the areas to study and look upon: • Know your product: A detailed study of all the VAS products and services of Reliance Communications. • Know the technology and the market • Who are your customers: Know the customer base for these services and to push and promote VAS throughout my term of internship. • What is the worth: Study the percentage revenue added through VAS. • Know your competitors: A detailed comparison of VAS Data Platform (R-World) at Reliance with all other major Telecom players in the market.7.2 VAS ACCESS DEVICESFor access of Value Added Services, feature rich handsets are needed which enable easy accessand display/storage of contents. There has been phenomenal growth in mobile subscriber basebut the low feature handsets continue to be in majority. Basically price is the biggest driver inpurchasing of handsets. The lack of feature rich mobile handsets thus continues to be a barrier tothe growth of Mobile Value Added Services. It is expected that the prices of feature rich mobilehandsets will decline with increasing competition among manufacturers and also because oftechnological advancement.IBS Hyderabad Page 37
  39. 39. Value Added Services at Reliance Communications Ltd.GPRS HandsetsCurrently the penetration of GPRS enabled handsets are close to 26% in India as against 99% inSouth Korea and 76% in Japan. Of the total mobile subscribers in India 65 million possessGPRS-enabled handsets. Of all those who posses GPRS enabled handsets only 20-25% of themhave got the GPRS activated and only about 15% use it. Even in case of developed nations likeSouth Korea and Japan not more than 50% of the subscribers owning GPRS enabled handsetsuse it. Shown under in fig 7.1 Fig. 7.1This clearly indicates that the consumer today engage more in text based services than the webbased applications. Therefore for MVAS to grow to its full potential the handset manufacturerswill have to look at ways to manufacture GPRS enabled phones which are affordable and userfriendly. Moreover they would also need to increase its awareness and educate the consumers onhow to use GPRS.3G HandsetsThe market for 3G in the country is expected to be huge with over 65 million wirelesssubscribers, who use their handsets to access data services on the Web. These subscribers arecurrently using mobile handsets which are internet-enabled and are potential broadbandsubscribers with the deployment of advanced wireless technologies such as 3G. According toIndian Cellular Association (ICA) about 5% of mobile users already have handsets that canworkon 3G spectrum. In addition, out of all those possessing the 3G enabled handsets thenumber of people who would use 3G services would be determined by the quality of contentavailable. Unlike most other countries, we are looking at 3G services not only as premiumservices but also as an extension of 2G. Since our broadband penetration is abysmal, 3G wouldIBS Hyderabad Page 38
  40. 40. Value Added Services at Reliance Communications Ltd.provide a much required boost to it. Given that mobile phones are much cheaper as compared toPCs, the demand for broadband on mobile is expected to be much greater. More importantly, 3Gwill solve problems more in rural India. Therefore the shift towards 3G would depend onaffordability of handsets along with the quality of content available.Bluetooth PenetrationThe mobile handset market in India is worth $7-billion. The hands-free mobile revolution seemsto be revolutionizing the use of Bluetooth-enabled headsets. As a category it is now coming outof the clutches of the accessories market and establishing a niche of its own. Established brandedmobile handset players today are actively looking at making headsets part of their packageoffering to customers. India is a major IT hub and it comes as no surprise that the IndianBluetooth headset market is expected to grow at a compound annual growth rate (CAGR) of74% in India vis-à-vis 48% in China. According to Industry experts, the professional headsetmarket in India is expected to grow at a CAGR of 21% over the next five years, which will bedriven by the contact centres and IT enterprise segment through addition of new seats andreplacement of handsets by headsets.In the year 2007-08, India shipped close to 85 million mobile handsets, compared to 66 millionunits shipped in the previous year, registering a year-on-year growth of around 29 per cent. Thiscould be attributed to the huge influx of ultra-low cost Chinese and operator-branded handsetsthat have sharply brought down the average selling price (ASP) of entry-level handsets andcconsumers need for changing phones as frequently as within 8-12 months. This growth is anoutcome of a burgeoning mobile services market and lower entry barriers across variouscustomer categories, as average selling prices of handsets is constantly falling and has gonedown to as low as Rs.599 in the wake of a highly competitive landscape with close to 25vendors.Handsets costing less than Rs 3,000 account for 70% on the market, and nearly half of these costless than Rs 2, 000. Yet interestingly the average cost of a phone sold in India is Rs5,000. Thiscould be attributed to the growing number of high-end phones being shipped to India. In FY2008 EDGE and WCDMA-enabled mobile phones contributed 15.4 per cent and 3.1%respectively of the total mobile phone shipments compared to 7.4% and 1.2%, in 2006-07.7.3 RELIANCE Vs COMPETITORSThough reliance is one of the largest telecom operators in India, the competition is not much farless than being fierce. There are many telecom operators in India and more are joining in thepool of operators through recent FDI’s and joint ventures. In a few months Delhi region willbecome the only city in the world where there will be 12 telecom operators serving its people.For any company to be successful, it shall have clear knowledge about its competitors, productsubstitutes and entry/exit barriers as in accordance to Porter’s Model.IBS Hyderabad Page 39
  41. 41. Value Added Services at Reliance Communications Ltd.Major competitors of Reliance Communications for its Value added services are: • Airtel • Vodafone • Idea • AircelTo study the market of VAS for Reliance Communication it is necessary to know all about thecompetitor’s products and services.Below is the comparison table of Reliance and its major competitors for Value Added Services– DATA PLATFORM VAS DATA PLATFORM COMPARISON AIRTEL IDEA VODAFONE RELIANCE AIRCEL FASHION & HOT & SPICY Under application HOT n NEW KREENA GLAMOUR store in special KAPOOR offers SPCL subscribe at cover girls on FTV BEACH wallpapers, videos PLUS various given demand, stylish BEAUTIES, and images HOLLYWOOD charges as per riya sen, wonder FREE available HOTTIES whichyour convenience girls, valentine ROMANTIC has images and to get updates beauties VIDEOS, HOT animations BIKINI VIDEOS, FHM SWIMSUIT GIRLS, FREE MODEL PHOTOSIBS Hyderabad Page 40
  42. 42. Value Added Services at Reliance Communications Ltd. FUN ZONE PICK OF THE WHATS NEW HOT n NEW PICK OF THE DAY + DIRECT DAY LINKS games, games, love messages, games, GAME Rs 50, animations, animations, new zoozoos, animations, ANIMATION wallpapers, wallpapers, new games 2010 wallpapers, Rs 15, IMAGE videos. videos. videos. Rs 10 SEND FREE X X X X SMS an application which isdownloadable and you can send aparticular number of free messages daily. SET HELLO X X CALLER X TUNE TUNES search hello tune Various categoriesby name of song, as, Set caller tune, movie or album music box, busy caller tune, my lib, copy other tuneBEST SELLERS X BEST PICKS HOT n NEW WHATS NEW games, divine blessings, Ads, latest animations and nature movies and wallpapers downloads, games mahamantras LATEST MOVIES + NOT MOVIE MOVIES MOVIE Yahoo MOVIES SPECIFICALLY MASALA REVIEWS MENTIONED Latest movies , Latest movies , Latest movie ad latest movies like All the latest Bollywood Bollywood banner 3 idiots, MNIK movies and Gossip, HOT Gossip, HOT etc. Sub videos of the babes, Fashion, babes, Fashion categorized as , related movie @ Astrology, latest movies, Rs 10 & Rs 15 English NEWS, name of a latest HINDI NEWS movie, hot hollywood, young n restless babes, goa tamil superhitAPP CENTRAL "MENU”: a APPLICATION OTHERS SERVICES +IBS Hyderabad Page 41
  43. 43. Value Added Services at Reliance Communications Ltd. separate link for STORE SPECIALS all applications available on IDEA. 1400+ Less applications MANNY applications as compared to APPLICATIONS divided among Airtel SUBvarious categories CATEGORISED ACCORDINGLY IMAGES AND Given as a VIDEOS… DISTRIBUTED COOL VIDEOS Direct link. DIRECT LINK / ALL OVER THE VIDEOS PAGE includes fashion video, categories like, some videos animations and 2009 best movies carwash bikini, shown as icon @ wallpapers of @ Rs 15, Love studio X hotties, Rs 15actors & actresses indi pop song, beach beauties,based on different WWE Divas, best of splitsvilla, categories swimsuit, classic comedies, yoga, wet n wild, best of roadies, magic in a minute, khatron ke khiladi, models.. Etc MUSIC MUSIC MP3 SONGS NOTHING MUSIC SPECIFICALLY MENTIONED BY THE NAME OF MUSIC Latest Hits, Top full songs>>> Polytones @ Rs Chartbusters, international hits, 10, Truetones @Bollywood Hits, bollywood latest, Rs 15 and MP3Devotional, Best golden classics, @ Rs 15 of all of 2009, Music bhakti sagar, full the latest songs maestros, album @ Rs 50, a and more Bollywood full song @ Rs Categories areClassics, Ghazals, 25, wallpapers @ also given. Like,Pak music, Airtel Rs 10, animations hollywood, Jingle, Lyrics, @ Rs 15true instrumental, top Love hits tones @ Rs 20, 10 etc. polytones @ RsIBS Hyderabad Page 42
  44. 44. Value Added Services at Reliance Communications Ltd. 10 MOVIES MOVIES X MOVIE MOVIES MASALA includes latest movies like All the latest animations and 3 idiots, MNIK movies and wallpapers of etc. Sub videos of theactors & actresses categorised as , related movie @ based on the latest movies, Rs 10 & Rs 15 movie name you name of a latest select movie, hot hollywood, young n restless babes, goa tamil superhit GAMES GAMES GAMES GAMES GAMES Whats New- download @ Rs name of the Name of the game top games, Games, Best 30 game, new + sub categories cricket games, Games, Games games, cricket, like new releases, puzzle games, Club. Priced bollywood, latest gamesgames bollywood between Rs 30- racing, adventure, of last decade, games, action, Rs 99 action, strategy cartoon racing, etc.. Rs 20 gamesaction & adventure, all @ adventure, priced Rs 50 or 99. @ Rs 49 and Rs Special games @ 99 Rs 15, Email & Chat CHAT + INTERNET GIVEN IN SERVICES + YAHOO MAIL SOCIAL MAIL NETWORKING various chat rooms available NEWS & NEWS+ LIVE NEWS under NEWS n TV NEWS SPORTS IBN NEWS INTERNET NDTV news SPORTS are News>>> TOI, Headlines, aajtak general news, room- regional given under IBN LIVE, DNA, online, Sun TV, finance news, news, world & MENU which is a BBC, more… CNBC tv online, international national news, separate link on UTVi online, news, sports business news, the home page. NDTV online, news. sports news. CNBC awaazSPORTS ZONE- online, Asianet manchester Online, WOW tv,IBS Hyderabad Page 43
  45. 45. Value Added Services at Reliance Communications Ltd. united, ESPN BBC world news, sports …. Almost subscription, everything related mobile espn, to BPL-latest buzz, F1 latest news, goal.com, Roger Federer spl, Australian OpenSERVICES FOR SERVICES INTERNET YOU m-commerce- community, Business & airtel bill yahoo mail, book Finance>>> payement, airtel your tickets, money control, recharge, movie, astrology BSE, NSE, air tickets, CNBC, TRACK recharge DTH, YOUR STOCKS DG toll, shopping, insurance. m- banking, mobile apps, important alert, wayfinder nnavigator, get DTH- spl offer, get broadband. Sensex, securityFULL TRACKS X MP3 SONGS FULL SONGSTimeless classics, full songs>>> latest movie Valentines spl. international hits, names with song Full songs @ Rs bollywood latest, name and a few 20. many songs golden classics, more categories. mentioned there bhakti sagar, full Download @ Rs for download. album @ Rs 50, a 25 full song @ Rs 25HOLLYWOOD X WHATS HOT HOT n NEW WHATS HOT SIZZLERSGAMES SHOP GAMES GAMES GAMES Table 7.1: Data Platform ComparisonIBS Hyderabad Page 44
  46. 46. Value Added Services at Reliance Communications Ltd.Here above “X” means: Not AvailableAuditing and Recommendation:After the completion of VAS market Analysis the next step comes of auditing andrecommendation to my company guide for the following matters:Propose services that are not included under VAS at Reliance to increase its competency in themarket. 1. Products and services those are not available on R-World in comparison with other operators. 2. New product and services that can be included on R-World (Reliance Data Platform). 3. Ways to improve the look and feel of the Home page. 4. Ways to improve the link for various Products & Services, i.e. the access for customers.IBS Hyderabad Page 45
  47. 47. Value Added Services at Reliance Communications Ltd. 8. VALUE ADDED SERVICES (VAS) PROMOTION8.1 INTRODUCTIONBeing such a big commercial house, Reliance Communications undertakes biggerresponsibilities for better execution of its entire process. The entire process of promotion isbalanced in various forms for the existing customers of Reliance Communication. Apart from theconventional methods of promotions through posters and billboards, Promotional Messages aresent to customers on daily basis to promote VAS directly. For this purpose campaigns aredesigned and scheduled on daily basis for both GSM and CDMA customers through SASMarketing Automation. • Promotional text messages are sent on customer’s MDN regarding various products and services of VAS. These may be contests, festival based messages, event based etc. • These promotional Messages are designed and scheduled as a campaign on daily basis with the help of SAS Marketing Automation (SAS Customer Intelligence studio 5.1)VAS has also been now promoted through various Events all around in the city. These eventstake form of promotional activities at various occasions like festivals and concerts. With thesepromotional activities the company is able to sell VAS products and services directly to thecustomers without involving any channel in between like RMS’s (Reliance Mobile Store) andRW (Reliance World).Tele-Calling or OBD (Out Bound Dialing)VAS promotion is also done via Tele-calling which involves calling customers based on theirCurrent Balance criteria and offering them various products and services related to VAS. This isdone by INDIA CALLING which is the approved Tele-calling agency for RelianceCommunication. A database is created consisting of customer MDN’s and their response to thecall. In Delhi circle, Tele-calling is an effective means of promotion as it involves moreinteraction with the customer. Customer feels much more involved and benefits are discussed atthat very moment and satisfaction level is reached every time.IBS Hyderabad Page 46

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